Special Assessments: A Study in Municipal Finance 9780231891103

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III SPECIAL ASSESSMENTS

STUDIES IN HISTORY, ECONOMICS AND PUBLIC LAW E D I T E D BY T H E F A C U L T Y COLUMBIA IN T H E

CITY

OF P O L I T I C A L

SCIENCE

OF

UNIVERSITY OF N E W

YORK

Volume II]

[Number 3

SPECIAL

ASSESSMENTS

A STUDY IN MUNICIPAL FINANCE

BT

VICTOR R O S E W A T E R

Second Böitlon

AMS PRESS NEW YORK

COLUMBIA UNIVERSITY STUDIES IN THE SOCIAL SCIENCES 7

The Series was formerly known as Studies in History, Economics and Public Law.

Reprinted with the permission of Columbia University Press From the edition of 1898, New York First AMS EDITION published 1968 Manufactured in the United States of America

Library of Congress Catalogue Card Number: 68-56686

AMS PRESS, INC. New York, N.Y. 10003

P R E F A C E

TO

T H E

S E C O N D

EDITION.

ALTHOUGH there has been some revision of American special assessment legislation and almost constant adjudication of special assessment law by the American courts in the five years that have elapsed since this monograph was first published, it is reprinted substantially unaltered in response to a demand that early exhausted the limited original edition. It is reprinted substantially unaltered because little of the more recent progress has gone beyond what was outlined in the work, while to bring it up to date would require additions to several chapters, the laborious compilation of later statistics, and the digesting of new laws and decisions for which, much as I should like to undertake the task, it is impossible at present to find the time. With a few words of preface, however, in general review of the latest American development of the subject, I am confident the usefulness of the book will suffer no impairment.

The special assessment legislation of the past few years has been directed not so much to a limitation or modification of the system as to the correction of abuses that had found their way into its administration. These abuses, as indicated in the text, spring from two sources. On the one hand the popular eagerness for premature public improvements and consequent negligence of public officials result in gross inequalities in the apportionment of the burdens and excessive impositions on the property owner. On the other hand, the vesting of the property owner with the sole power of initiation enables obstructionists to prevent the execution of needed public works and to evade payment of assessments after the benefits have ac(v)

vi

PREFACE

TO THE SECOND

EDITION

crued. T o construct special assessment machinery for our larger cities that will avoid these extremes and mete out substantial justice to all concerned is the problem with which o u r legislatures are still grappling. A s an e x a m p l e in point, the new city charter for O m a h a ( L a w s of N e b r a s k a , 1897), re-enacts provisions of former statutes relating t o special assessments, but seeks to make the system more elastic b y differentiating between the classes of improvements in w h i c h petitions of abutting property owners are pre-requisite t o jurisdiction. W i t h i n an arbitrary area comprised within a radius of 3,000 feet from the court-house square, the city council m a y order paving and other street improvements without regard to the wishes or protests of the parties to be assessed to defray the expense. F o r original paving b e y o n d these limits the council has jurisdiction to act unless the property owners file protest within the designated time. F o r repaving, jurisdiction can b e acquired b y the council only t h r o u g h the presentation of the requisite petition. T o meet conditions in the city of Chicago, the Illinois legislature has passed a new and comprehensive special assessment act ( L a w s of Illinois, 1897), that completely revolutionizes the administrative system formerly in operation there. T h e law as passed refers to special assessment proceedings and also condemnation proceedings where the property sought to be condemned is to be paid for b y special assessments. O n e of t h e first objects sought b y the bill was to provide for a more complete notification to property owners about to be assessed, and further to provide for them a hearing before the local improvement should be ordered. A n o t h e r apparent object w a s t o take from the city council the power to originate local improvements, entrusting it to a board of local improvements, composed ex-officio of municipal officers. A third object w a s to d o a w a y with the old system of rebates. Under the new Illinois law the Commissioner of Public W o r k s , Superintendent of Sewers, Superintendent of Streets, Superintendent

PREFACE

TO THE SECOND

EDITION

vii

of the Special Assessment Bureau, and C i t y Engineer, ex-officio, constitute the Board of Io>cal Improvements, and all ordinances for local improvements must originate with the board. Resolutions are adopted providing for improvements, and notice is sent to the parties to be assessed informing them when a public hearing will be had. A t the hearing the advisability of the improvement, the nature and the character of the work, and other matters in which property owners are interested, are discussed, after which the board can, as its j u d g m e n t dictates, proceed with the improvement as first contemplated or engraft modifications suggested b y the property owners. T h e C i t y Engineer then makes an estimate of the cost for such an improvement, and an ordinance is prepared which is sent to the Council for passage. A f t e r the passage of the ordinance notices are again sent the property owners informing them that such an ordinance has been passed and that proceedings have been commenced in court, and further notifying them to appear in court t o answer. A l l rolls for these assessments are made and compiled b y the Superintendent of the Special Assessment Bureau, instead of, as formerly, b y three commissioners appointed b y the court. T h e court proceedings as to the hearing of objections are practically unaltered. A f t e r judgment of confirmation, provisions are made for the immediate letting of the contract or the advertising of bids, and an opportunity given the property owners, or rather the owners of a majority of the frontage of the abutting lots, to do the work b y themselves or their agents, subject to the supervision of the Commissioner of Public W o r k s . Within twenty days after the execution of the contract the Board of L o c a l Improvements certifies to the court the amount of the contract, costs, etc., whereupon there is immediately rebated any excess for which the property owner had been assessed and the same credited pro rata upon the respective assessments. S o far as it relates to special assessments, the new municipal charter of Greater N e w Y o r k ( L a w s of N e w Y o r k , 1897), is

viii

PREFACE

TO THE SECOND

EDITION

principally a codification of the laws already in force. The dual sets of machinery for ordinary street improvements and for improvements that involve the exercise of eminent domain are retained, the assessments made by them being distinguished as those required by law to be confirmed by a court of record and those not required by law to be so confirmed. Control over the latter is vested in a newly created board of five commissioners, each at an annual salary of £3,000, under which is organized the Department of Taxes and Assessments. The assessments are made on certificates of the respective heads of the departments in which the work to be paid for has been done. They are submitted for confirmation to a board of revision of assessments consisting of the comptroller, corporation counsel and president of the Board of Public Improvements, before whom aggrieved property owners may appear. In fact, the right to a hearing before the Board of Revision is made their exclusive remedy except in cases of fraud, and even then the property is subject to reassessment according to the benefits for which they should in fairness pay had there been no fraud. The authority to initiate proceedings for making improvement to be paid for by special assessment is furthermore absolute in the municipal officers, with the exception of replacing street pavements, for which a majority petition is required to confer jurisdiction. VICTOR ROSEWATER. Omaha, January, 1898.

TABLE OF CONTENTS TAGS

CHAPTER I.

§ § § § § §

I. 2. 3. 4. 5. 6.

INTRODUCTORY.

Benefit Special Special Special Special Special

CHAPTER I I .

as a Factor in Finance Assessments in France Assessments in Belgium Assessments in Germany Assessments in the United Kingdom . Assessments in the United States . .

H I S T O R Y OF S P E C I A L A S S E S S M E N T S IN T H E UNITED

§ § § § § § § § § § § §

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

13 14 16 17 20 24

STATES.

New Y o r k before 1813 N e w Y o r k , 1813 to 1851 New Y o r k since 1851 Massachusetts T h e Remaining N e w England Commonwealths. Pennsylvania T h e Remaining North Eastern Commonwealths. T h e Southern Commonwealths T h e North Central Commonwealths . . . . T h e North Western Commonwealths . . . . T h e Coast Commonwealths and Territories . Summary ('*)

26 29 33 38 39 40 42 43 49 52 54 56

TABLE OF

X

CONTENTS PAGS

CHAPTER

III.

SPECIAL

ASSESSMENTS

IN

PRACTICAL

OPERATION.

§

I. A n a l y s i s of S y s t e m s of Assessment

57

§ §

2. Special Assessments in New Y o r k City . . . 3. Assessments for Street Improvements . . . .

58 58

§

4. Assessments for Street Openings

60

§ §

5. Collection and Application of Assessments . . 6. Remedies of the T a x p a y e r

62 62

§

7. L o c a l Variations: Purposes; A c q u i r i n g Jurisdiction 8. N o t i c e ; Subjects A s s e s s e d ; R u l e of Estimation. 9. Limitations on A m o u n t ; Confirmation and L e g a l Nature

§ §

63 66 68

§ IO. Collection and Remedies § 1 1 . T h e Rebate Nuisance § 12. Rebates in Minneapolis

69 71 72

§ 13. Rebates in C h i c a g o

72

§ 14. E x t r a v a g a n c e and Corruption § 15. T h e N e w Jersey Insolvent Cities

75 75

§ 16. Assessment A r r e a r a g e s in B r o o k l y n . . . . § 17. T h e N e w Y o r k Assessment Commission . .

77 79

§ 18. Statistics of Special Assessments

82

§ 19. Classification according to Purposes . . . . § 20. Variations in Receipts from Special Assessments

84 86

§ 2 1 . Statistics of Assessment A r r e a r a g e s and Sales.

86

CHAPTER I V .

T H E L A W OF SPECIAL ASSESSMENTS.

§

1. T h e L e g a l Definition

§

2. L e g a l Theories

88 89

§

3. Under the Police Power

90

§

4. Under the Power of Eminent Domain . . . .

91

§

5. Under the T a x i n g P o w e r

92

TABLE OF CONTENTS

x

j

PACK

§

6. T h e Essential Limitations

93

§

7. Public Purpose

94

§ §

8. Apportionment 9. Not to E x c e e d Benefits

99 100

§ 10. Legislative Omnipotence § 11. E x t e n t of Municipal Powers

106 107

§ 12. Purposes of Special Assessments § 13. A c q u i r i n g Jurisdiction

108 ill

§ 14. Notice and H e a r i n g § 15. T h e Subjects of Assessment

115 117

§ 16. T h e R u l e of Estimating Benefits

118

§ 17. Report and Confirmation § 18. T h e L e g a l Nature of the C h a r g e

121 123

§ 19. Collection Proceedings § 20. Remedies of the T a x p a y e r

125 126

§ 21. T h e T r e n d of L e g a l Interpretation

128

CHAPTER V .

T H E T H E O R Y OF SPECIAL ASSESSMENTS.

§ §

1. T h e Place of Special Assessments in Finance . 131 2. Special Assessments Compared with General

§

3. Special Assessments Compared with

§ § §

4. Special Assessments Compared with F e e s . . 1 3 4 5. Incidence as between O w n e r and Occupier . . 136 6. Incidence as between O w n e r and Subsequent

§

7. D o u b l e Taxation

§

8. T h e Justice of Special Assessments

141

§

9. T h e " Unearned " Increment

144

Taxes Taxes

Purchaser

133 Special 133

139 141

§ 10. Practical Objections and A b u s e s

146

§ 11. Results

148

xii

TABLE

OF

CONTENTS PACK

BIBLIOGRAPHICAL N O T E

150

BIBLIOGRAPHY

152

T A B L E OF CASES

154

CHAPTER I INTRODUCTORY § I. Benefit as a Factor in Finance. The idea of benefit was at one time the controlling factor in the imposition of all public charges. Only slowly and gradually and driven by force of necessity did the legislator and financier begin to adopt other bases for taxation. And long after the practice of apportioning the general public expenses according to the advantages or protection conferred by government had been in part, if not wholly, abandoned, it was still the custom of many eminent economists to build their entire theory of public revenue upon the foundation of the benefit derived from its expenditure. To-day this is no longer true. The abstract basis of general taxation is commonly considered to be not the services rendered by the state, but the ability of the contributor to pay. Benefit, if recognized as a factor at all, is admitted only so far as it serves as one of the indices of ability. The position of theory and practice has been reversed: whereas formerly theory lagged behind practice, practice has now been outstripped by theory. Here, as in many other branches of economics and finance, the development seems to have been pushed to the extreme. Benefit still plays an important role in the imposition of certain public charges, particularly in local finance. In this country it finds an acknowledged scope of action in those numerous cases where municipal improvements result in distinct and traceable advances in the value of adjacent real property. The impositions laid upon the property-owners in order to defray the expenses of such improvements are with us technically known as special assessments. 363] 13

SPECIAL

H

ASSESSMENTS

[364

T h e purpose of this monograph, then, is to study the history of special assessments, the methods and extent of their application, their legal aspect before the courts, and their position in the science of finance. § 2. Special Assessments in France. Although rarely imposed, charges in the nature of special assessments are not altogether unknown in Europe. Records remain of the application of the underlying principle in France as early as 1672. A t that time the question arose whether, when dark and narrow streets are widened, the proprietors of those houses which profit by such improvements ought not to contribute to the expense. Already decided several times in the affirmative, the decree of the council now settled it once for all. By its provisions the owners of several houses in Rue de Arcis facing the demolished buildings were ordered to bear their shares of the cost in proportion to the advantages which they should receive therefrom. Although issued for the particular case, that decision became the rule. So a few years later,1 a new decree enjoined it upon the property-owners of Rue Neuve Saint-Roche to pay, according to an assessment roll ordered by the king, the sum of 37,515 livres for distribution among those parties who were " required to withdraw their buildings in order to leave space for the enlargement of the street.'" Similar assessments for benefit were again authorized by the legislature of 1807 under the name of indemnités pour paiement de plus-value.* According to the law then enacted, " when by the opening of new streets, by the creation of new public places, by the construction of quays, or by any other public work, general, departmental or communal, ordered and approved by the government,private property shall have acquired a marked increase in value, such property may be charged with "May 27th, 1678. 'Clément, La Police sous Louis XIV.,

p. 144.

• Loi relative au dessèchement des marais, 16 Septembre, 1807.

SPECIAL

365]

ASSESSMENTS

15

the payment of an indemnity which shall be adjusted according to half the value of the advantages acquired."1 This enactment still governs such transactions in France. But as we learn from the work of M. Aucoc, the procedure thus authorized has been followed in but very few instances, and he has not been able to cite more than a score of applications.* The greater number of these were made at the instigation of cities which were constructing street improvements upon a large scale—Paris, Lyons, Grenoble, Toulouse. Thus an ordinance of March 31st, 1843, declared these clauses of the law of 1807 applicable to the riparian owners upon Rue de Rambuteau in Paris. But for the improvements effected upon the streets of Paris, Lyons and Marseilles during the second empire—improvements much more important than those of previous years—the city authorities did not make use of the powers vested in them. The central government has rarely employed the system. In 1855 the case of a quay erected by it in conjunction with the city of Lyons upon the right bank of the Saône, it was decided to apply the provisions in question to these proprietors, whose lands would be increased in value by reason of the execution of the work. Another striking example is found in the measures taken in 1854 and 1855 on occasion of the works on the lower Seine. The embankments then constructed resulted in the artificial reclamation of considerable land, and the government, instead of selling this to adjacent owners, merely subjected them to an assessment for the benefits conferred. The system enacted by the law of 1807 is in brief this :* The liability of the property owners must be declared by a decree of the Chef de F État rendered in the Conseil d' État. The assessment is fixed by a commission organized for the pur1

Law 0/1807, sec. 30.

* Droit Administratif, ' Aucoc, Droit

ii., p. 732 et seq.

Administratif,

ii., p. 734 et seq.

16

SPECIAL

ASSESSMENTS

[366

pose, whose duty it is to designate the property-owners who are specially benefited by the work, to determine the amount of the benefit, and to fix the share which each is to pay. A s a rule, the decree which authorizes the assessment fixes the district of benefit; in every case it states the portion, not exceeding one-half, of the value of the accruing advantages which may be demanded. T o this end the commission are required to secure the advice of experts, and their report may be contested before the Conseil d' État. The assessment may be paid, at the choice of the taxpayers, either in ready money, in installments at four per cent, interest, or by a transfer of a part of the property if divisible; or the whole property may be given up at its appraised valuation before the improvement. Upon refusal or neglect to pay, the administration may proceed against the delinquents as with any ordinary debt due to the government. § 3. Special Assessments in Belgium. A t the time of its enactment, the French law of 1807 extended to a portion of the territory now included in Belgium. When the latter country finally became independent, the doctrine of special assessment for benefit not only persisted, but attained a wider application than it had received in France. The Belgian towns are authorized both to determine whether the cost of a particular improvement shall be met from the public treasury or from charges upon abutting property-owners, and also the various details of the system by which such charges are imposed. The procedure, therefore, differs from town to town. The foot-front rule of estimating benefits appears to have been most commonly adopted, although the practice is not uniform as to apportioning the whole or a designated portion of the expense upon the improvement district. Taken altogether, the purposes to which the system is applied in Belgium are more numerous and varied than elsewhere in Europe. The original plan comprehended only the expenses of opening and constructing new streets. The local ordinances of the different towns include,

367]

SPECIAL ASSESSMENTS

\7

in addition thereto, the building of foot-ways, the laying of pavements, the construction of sewers, the sweeping and sprinkling of streets, the enlargement and repair of existing streets and public places. Moreover, the central government has similarly assessed the cost of opening canals upon the adjacent proprietors.1 There are three § 4. Special Assessments in Germany. classes of public roads in Prussia. First, highways administered by the province authorities. Second, a group of lesser general roads administered by the circle. Third, the city streets under the control of the municipal government. Whether a road belongs to one class or to another depends largely upon its historical development. Of those belonging to the third class, the older ones have usually arisen without any specific legal authorization, the cost being defrayed as local custom might direct. Only since 1875 has a specially ordained procedure been provided by a general law for the construction of new streets. This procedure involves certain charges upon abutting owners very much in the nature of special assessments. They are termed in Prussia InteressentenZuschüsse or Intcressentenchausseebciträge According to the law of 1875, street improvements may be made at the instance either of the police authorities or of the municipal executive board, subject to the consent of the municipal council.' The approval of the police authorities is necessary in every instance, unless upon appeal the council of the circle over-rules the decision of the police officials. After such approval has been secured, the plan of the proposed improvement must be made public, and opportunity must be given for hearing any objections which may be urged. Only 1

Leemans, Des Impositions Communities en Belgique, chap. 5 to 8.

2

Leidig, Preussisches StaJtrecht, pp. 375, 385.

3 Gesetz betreffend die Anlegung und Veränderung von Sirassen und Plätzen in Städten und ländlichen Ortschaften, vom 2 Juli, i8yj. See also Leidig, p. 386 et seq.

i8

SPECIAL

ASSESSMENTS

[368

after the decision of the council of the circle upon disputed points, if any, is the plan of the improvement to be formallyproclaimed by the municipal council. F o r defraying the expenses of the improvement, the city is then authorized to levy special assessments upon the property-owners thereby benefited. Liability to assessment may arise in two w a y s : First, where, upon the construction of a new street, the propertyowner erects a building upon his land after the beginning of the improvement. Second, where, upon the improvement of a street already laid out, but still without abutting buildings, the property-owner erects a building upon his land after the beginning of the improvement. In both cases the extent of the benefit chargeable is the same; that is to say, all parties owning property abutting upon the street who commence the erection of buildings after the designated day are subject to assessment. 1 In the sum assessable upon the parties benefited are included both the cost of the entire street improvement and also the cost of maintenance for a specific period not exceeding five years. A n d the cost of the street improvement comprises the expenses of purchasing and clearing the land, the original construction, the drainage and the provisions necessary for lighting. T h e individual assessed is required, as the local ordinance may provide, to pay his share of half the total expenses in the ratio which the frontage of his property bears to the whole street line. If, however, the street exceeds twenty-six metres in width, half the cost is to be computed upon the basis of that width and the remainder charged to the city as a whole. T h e ordinance may require a single payment, or one payment toward the cost of construction and a periodical contribution for maintenance. T h e assessment upon the property-owner becomes due upon that day when the liabil1 T h e city may prohibit the erection of t u i l d i n g s upon land necessary for a contemplated street until the street is legally laid out.

269]

SPECIAL

ASSESSMENTS

ig

ity of the city arising out of the improvement in its whole extent becomes legally determined; but if the property-owner does not erect his building until later, it then becomes due immediately.' T h e contribution demanded in Prussia is not strictly a real charge. If the property is alienated by the owner after the assessment is due, the city looks to him and not to his successor for payment. If, on the other hand, he alienates after the time when he became liable to assessment, but before the latter is due,' then the owner at the time the assessment becomes due is required to pay the same. On demanding payment, it is incumbent upon the city to show its legal authority, while the remedies of the taxpayer are the same as for other public impositions. Systems very similar to that just described as in force in Prussia exist in various other German commonwealths.' In Baden the so-called Sosiallastcn are impositions demanded of those who, within a particular local district, derive special advantages from a certain street, bridge or well. These date from an ordinance of 1 8 3 1 . No permission to build will as a usual thing be granted for new localities until the land needed for street purposes has been put into proper condition; and those who build later must, before they seek to obtain permits, first pay their proportionable share of the cost. In Wiirtemberg and Hesse, upon the construction of new streets or the extension of existing ones, it may be required by local ordinance that the abutting property-owners who wish to erect buildings thereon, must bear the expense of acquiring the necessary land, clearing it, its first construction, as well as for its maintenance during a designated period. And a Saxon law of 1

On Ihe »rising of his liability thereto by beginning to build.

5

That is, after erecting a building, but before the liability of the city has been determined by a course of legal proceedings. 5

Loening, Vcrwaltung>rechty

p. 580; Neumann, Die Steuer uud das

liche Inttresse, p. 3 3 1 ; Ludwig-Wolf, Sac/isiscAe Gesettgcbung

!'• 9s-

uber

offettl-

Wegebau,

SPECIAL

20

ASSESSMENTS

[370

1870 makes the burden of the original construction of new roads rest upon such persons only who own property in those new building-districts which have made such roads necessary. § 5. Special Assessments in the United Kingdom. Numerous English statutes have been cited at various times as precedents for the proposed " betterment tax " 1 in the United Kingdom. There are, first, a number of sewers and drainage acts dating from 1427 by which commissions were appointed to secure the construction or repair of " walls, ditches, gutters, sewers, bridges, causeys, wears and trenches," which had been damaged by the inundation of the sea, and to apportion the work, or the expenses of the work, upon all whose landed interests received benefits therefrom."' These laws, however, sought the prevention of injury by means of common works of protection, rather than the enhancement of the value of the property affected. Rates under the later sewers acts scarcely approximate our special assessments any more nearly. It is an indispensable condition that a person taxed may by possibility receive a benefit from the expenditure, and therefore holders of mountainous or high ground which cannot be surrounded are in general exempt. Still the exact measure of the benefit is not the measure of the liability to be taxed.® The question of benefit is one ofjurisdiction.il importance only. Secondly, comes the act passed in 1667 to regulate the rebuilding of the city of London after the great fire of the previous year, as also the several subsequent amendatory acts. By section 20 of the first-named statute,4 the corporation was 1

A word said (o have been " imported from the United States of America,"

although it would scarcely be recognized by many Americans. ' See statute 6 Henry V I . , chap. 5 (1427), and 23 Henry V I I I . , chap. 5 (1531). * Report

of the Poor Law

Commissioners

on Local

Taxation,

1843 (pub-

lished 1844), p. 65. * 19 Chas I I . , chap. 3.

Sec. 20, reads as follows : " A n d be it further enacted by

1°:e authority aforesaid, That the numbers and places for all common sewers, drains end vaults, and the order and manner of paving and pitching the streets and lanes tiithin the said city and liberties thereof, shall be designed and set out by such

37i]

SPECIAL

ASSESSMENTS

21

e m p o w e r e d to appoint certain persons w h o were at their meeting to h a v e authority to design and set out " the numbers and places for all common sewers, drains and vaults, and the order and manner of paving and pitching the streets and lanes within the said city or liberties thereof," and also " to impose a n y reasonable tax upon all houses within the said city or liberties thereof, in proportion to the benefit they shall receive thereby, for and towards the new making, cutting, altering, enlarging, amending, cleansing and scouring all and singular the said vaults, drains, sewers, pavements and pitching aforesaid." A n d b y a subsequent section, the actual charges to be imposed were to be ascertained in case of disagreement through the a g e n c y of a jury. 1 T h i s portion of the act, at first operative for seven years only, was three years later made perpetual,* and so many persons as the said mayor, aldermen and commonalty in common council assembled, shall from time to time authorize and appoint under their common seal or the more part of them; which said persons, so authorized and appointed, or any seven or more of them, together with the said surveyors, or some or one of them, within his or their precinct respectively, shall at their meeting have power and authority to order and direct the making of any new vaults, drains or sewers, or to cut into any drain or sewer already made, and for the altering, enlarging, amending, cleansing and scouring of any old vaults, sinks or common sewers: " For the better effecting whereof, it shall and may be lawful to and for the said persons so authorized and appointed, as aforesaid, or any seven or more of them, at their said meeting, to impose any reasonable tax upon all houses within the said city or liberties thereof, in proportion to the benefit they shall receive thereby, for and towards the new making, cutting, altering, enlarging, amending, cleansing and scouring all and singular the said vaults, drains, sewers, pavements and pitching aforesaid : «• And in default of payment of the said sums to be charged, it shall and may be lawful to and for the said persons so authorized as aforesaid, or any seven or more of them, by order and warrant under their hands and seals, to levy the said sum and sums of money so assessed, by distress and sale of the goods of the party chargeable therewith, and refusing or neglecting to pay the same, rendering the overplus (if any be.)" I have been unable to find any record of the actual application of this act. 1

Ibid., sec. 26.

* 22 and 23 Charles II., chap. 17.

SPECIAL

22

ASSESSMENTS

[372

with the proviso that all w h o b y M a y 1st, 1672, had been already charged under the act should not thereafter " be troubled, molested or prosecuted for or in respect thereof." The authority o f the persons thus appointed was " inlarged " b y a statute enacted in 1708 which g a v e them the same powers as were vested in commissioners of sewers, and practically b r o u g h t the w h o l e matter under the general acts respecting sewer rates. 1 T h e provisions of these acts, as w e shall see, in reality contained the germ from which our system of special assessments sprang. Unfortunately, that germ was not developed in England, and the acts, in consequence, can scarcely be regarded as anything more than mere precedent. T h i r d l y , the Metropolis Management A c t of 1855* enables the vestry boards, whenever it appears that an improvement effected is either for the benefit of a particular part of the district, or does not result in equal benefit for the whole district, t o e x e m p t any part of such district from the l e v y , or to require a less rate to be levied thereon, as circumstances m a y dictate. A n o t h e r clause of the same act provides for the paving of any new street as a private improvement to b e effected b y the vestry boards as the agents of the abutting property-owners and at their expense.' T h e question presented b y this piece of legislation is that of narrowing the district, not that of apportionment within the district. T h e clause relating to paving is similar in nature to the provisions of the Public Health A c t of 1 8 7 5 w h i c h allows urban authorities, in certain contingencies, to undertake the so-called private street i m p r o v e m e n t s — sewer, level, pave, metal, flag, channel or make g o o d or to provide proper means for lighting the s a m e — a n d to recover the expenses incurred from the owners in default " according to the frontage of their respective premises." ' 7 Anne, chap. 9. ' 18 and 19 Victoria, chap. 120.

• Ibid., sec. 105. 4

38 and 39 Victoria, chap. 55, sec. 150.

373]

SPECIAL

ASSESSMENTS

23

A n d finally, there is that section of the Artizan's Dwellings A c t 1882, reenacted in the Housing of the W o r k i n g Classes A c t , 1890,' relating to the compensation to be made for the demolition of obstructive buildings. S o much of that amount is to be apportioned b y the arbitrator among the owners of the other buildings, respectively, as may be equal to the increase in value of such adjoining buildings. T h e apportionment rests on the distinct basis o f " the increase in value by reason of the demolition of such obstructive buildings." S o far, the analogy holds good. It departs from the principle of betterment in that the demolition is ordered on the ground of injury to the adjoining house, and not on the ground of benefit accruing to real property from a public improvement. A n earnest attempt was made to re-introduce the system of special assessment for benefit in the Strand Improvement Bill, 1890, promoted by the London county council.' T h e object of the bill in question was to provide for an important metropolitan improvement in the widening of the Strand between the churchcs of St. Mary-le-Strand and St. Clement Danes, and to levy contributions—not to exceed one half the cost—upon a certain area in the neighborhood of the improvement, which it was alleged would be increased in value thereby, in the form of rent charges to be fixed by an arbitrator after the improvements should be carried out. T h e committee to which the bill was referred, after refusing to hear any evidence relating to the law of America upon improvement schemes, reported that in the case at issue they were of the opinion " that the principle of betterment could not be applied to the improvement proposed by the bill." T h e agitation for the measure aroused considerable opposition, and the bill was withdrawn after the adoption of several emasculating amendments.' The failure of 1

45 and 46 Victoria, chap. 54, sec. 8.

1

53 and 54 Victoria, chap. 70, sec. 38-9.

* See Parliamentary 4

Sessional Papers, 1890, xv., no. 239.

See the discussion running through the Times from Dec., 1889, to March, 1890.

SPECIAL

24

ASSESSMENTS

[374

this movement, therefore, makes it impossible to find any system of betterment in present operation in the United Kingdom. 1 § 6. Special Assessments in the United States. The origin of special assessments in the United States has already been the theme of some theorizing and speculation. One learned jurist thinks that " it had its origin and development in the principle of local self-government, characteristic of free institutions founded by the Anglo Saxon race—the leaving to each local community the due administration of the affairs in which it had an exceptive, peculiar and local interest, and in the nature of real property, to which it is alone applicable Not the creation of a philosophical brain, drafting constitutions and forms of government, but the outgrowth of the necessities and varying exigencies of local communities."* According to another theory, the system " most probably arose spontaneously out of natural considerations of equity and convenience."® That an historical investigation will not bear out these assumptions, it is almost needless to add. The facts of the matter are quite different. The underlying principle of special assessment for benefit first appeared in this country in the provisions of a province law of New York in the year 1691. The effective clause of this statute was copied almost literally from the twentieth section of the English act passed 1667, and re-enacted 1670, to regulate the re-building of London after the great fire.4 The idea was not, as has often 1

For the later history of Betterment in England see the chapter on

The

Betterment T a x in Professor Seligman's Essays in Taxation, chap. X I . (note to second edition). • George, Ch. J., in Macon vs. Patty, 57 Miss., 378, p. 399. 3

Mr. John Rae, " T h e Betterment T a x in A m e r i c a , " 57 Contemporary

p. 644.

Review,

See also the opinion of Justice A g n e w in Washington A v e n u e , 69 Pa.

St., 352, 35g. 4

Compare the clause given ante, p. 16, with the N. Y . law given post, p. 22.

Mr. Rae, by an accidental allusion, hints at the possibility of an English source. 57 Contemporary

Review,

645.

375]

SPECIAL

ASSESSMENTS

25

been erroneously supposed, indigenous upon A m e r i c a n soil. F o r t w e n t y years the substance of the plan had been enrolled upon the E n g l i s h statute-book. T h e very words and phrases used were borrowed from across the water. 1 T h e N e w Y o r k law remained unrepealed, t h o u g h inoperative, until 1787, w h e n it w a s adapted more closely to the existing necessities. Only in the sense of adaptation can the system be said to have had its origin in the e x i g e n c y and convenience of the A m e r i c a n colonists. T h i s method of raising revenue for local improvements l o n g remained peculiar to N e w Y o r k . N o noteworthy h e a d w a y seems to h a v e been made in gaining a foot-hold in the other commonwealths until after the people began to recover from the effects of the war of 1812. T h e first development of the system, then, corresponds roughly with the movement for the construction of internal improvements covering the y e a r s just before and after 1830, and d y i n g out with the crisis of 1837. A n o t h e r tendency to spread to the newer c o m m o n w e a l t h s displayed itself along the later forties and early fifties, coinciding to a great extent with the era of premature railway building. T h e final movement began immediately upon the close of the late civil war; it is a more general phenomenon than the earlier ones, and has not y e t quite ceased its victorious march over the far-western portions of the c o u n t r y . It has even made some headway in crossing the Canadian border.* T h e details of these various phases of development form the subject of the succeeding chapter. 1 For two earlier cases in New Amsterdam in 1657 and 1660, see Seligman, Essays in Taxation, 2nd edition, 1897, P- 343' n o t e 1 (note to 2nd edition). 1

E. g., Toronto.

CHAPTER

II

HISTORY OF SPECIAL ASSESSMENTS IN T H E U N I T E D STATES § i. New York before 1813. Taxation by special assessment for benefit traces its origin in this country back to the period o f colonial New Y o r k . Other colonies levied local taxes, some of which were, perhaps, apportioned according to estimated benefits, but they were isolated instances of apparently fortuitous impositions. Special assessment first developed as a revenue system in the province of New Y o r k , where, from its very inauguration, it has maintained its place upon the statute-book, and has spread its branches, one by one, into nearly all the commonwealths that have been joined under the government of the United States. In New Y o r k it has been longest in continuous operation; in New Y o r k it has achieved its greatest and most extensive results. This alone will justify a somewhat detailed description of its origin and development in that commonwealth. In September, 1691, an act was passed by the assembly of the Province of New Y o r k entitled " an act for regulating the buildings, streets, lanes, wharffs, docks and allyes of the city of New Y o r k . " 1 This statute authorized the mayor and aldermen to appoint surveyors and supervisors to see that the streets and other public places be conveniently regulated; to obstruct buildings which might narrow the street; and to exercise the right of eminent domain under certain prescribed conditions. A n d it continues : " And forasmuch as the Filth and Soil of the said City, lying in the publick Streets thereof, doth prove a common Nusance unto the In1

Wm. Bradford, Arts of the Assembly of the Province of New York, p. 12.

26

I376

SPECIAL

377]

ASSESSMENTS

27

habitants and Traders to and from the said City, and very prejudicial to their Health : For the removal thereof, Be it further Enacted by the Authority aforesaid, That the Numbers and places for all common Shoars, Drains and Vaults, and the Order and manner of Paving and Pitching the Streets, Lanes and Allyes of the said City, shall be designed and set out by the Mayor, Aldermen and Common Council of the said City, together with the said Surveyors & Supervisors appointed in the manner aforesaid; and when they assemble, shall have Power and Authority to order and direct the making of Vaults, Drains and Shoars, or to cut into any Drains or Shoars already made, and for the altering, enlarging, amending, cleansing and scouring of any Vaults, Sinks or common Shoars. And for the better effecting whereof, it shall and may be lawful to and for the said Mayor, Aldermen and Common Council, together with the said Surveyors and Supervisors, at their said Meeting, to impose any reasonable Tax upon all Houses within the said City, in proportion to the benefit they shall receive thereby, for and towards the making, cutting, altering, enlarging, amending, cleansing and scouring all and singular the said Vaults, Drains, Shoars, Pavements and Pitching aforesaid. And in default of payment of the said sum to be charged, it shall and may be lawful to and for the Mayor and Aldermen, Etc., so authorized, as aforesaid, by Order or Warrant under their Hands and Seals, to levy the said sum and sums of Money, so assessed, by distress and sale of the Goods of the Parties chargeable therewith, and refusing and neglecting to pay the same, rendring the Over-plus, if any be." W h i l e it is probable that little actual use was made of this law, yet it remained in force in 1772, when V a n Schaack published his collection of public acts, and it was practically reenacted after the revolution by the new commonwealth government in April, 1787. 1 T h e new statute, however, differed from the old in several points. T h e latter, it will be noticed, provided that the tax be imposed upon " all houses within said city in proportion to the benefit they shall receive thereby," and left to the mayor and aldermen a wide discretion as to the 1

Laws of New York, ij8j ; I Greenleaf, 441.

28

SPECIAL

ASSESSMEXTS

m e t h o d a n d p r o c e d u r e of fixing the assessment.

[378 In these re-

spects, t h e act of 1787 w a s m u c h m o r e definite a n d

explicit.

T h e p r o v i s i o n reads as f o l l o w s : " A n d for the better effecting thereof, it shall and may be lawful to and for the mayor, aldermen and commonalty of the said city in common council convened, to cause to be made an estimate, or estimates, of the expence of conforming to such regulations aforesaid, and a just and equitable assessment thereof among the owners or occupants of all the houses and lots intended to be benefited thereby in proportion, as nearly as may be, to the advantage which each may be deemed to acquire respectively. And in order that the same may be safely and impartially performed, the said common council shall, from time to time, appoint five sufficient and disinterested freeholders for every such purpose, who, before they enter into the execution of their trust, shall be duly swom before the said mayor or recorder, to make the said estimate and assessment fairly and impartially, according to the best of their skill and j u d g m e n t ; and a certificate in writing of such estimate and assessment being returned to said common council and ratified by them, shall be binding and conclusive upon the owners and occupants of such lots so to be assessed respectively; and such owners or occupants respectively, shall thereupon become and be liable and chargeable, and are hereby required to pay such person as shall be authorized by the said common council to receive the same, the sum at which such house or lot shall be so assessed, to be employed and applied for and towards the making, altering, amending, pitching, paving, and scouring such streets, and making, constructing, and repairing such vaults, drains and sewers as aforesaid ; and in default of payment thereof, or any part thereof, it shall and may be lawful to and for the mayor, recorder and aldermen of the same city, or any five of them, of whom the mayor or recorder always to be one, by warrant under their hands and seals, to levy the said sum or sums of money so assessed, by distress and sale of the goods and chattels of the owner or occupant of such house or lot so assessed, and refusing or neglecting to pay the same; rendering the overplus, if any there be, after deducting the sum assessed, and the charges of distress and sale, to such owner or occupant respectively, or their legal representatives."

379]

SPECIAL

ASSESSMENTS

29

The assessment was no longer to be laid upon all houses within the city, but only upon such of them as were " intended to be benefited." Moreover, since the estimate and assessment were to be made before the contemplated work, the council were authorized to make a further levy in case the sum already collected should prove insufficient. Notwithstanding the general powers conferred, the mayor and aldermen were reluctant to employ their authority for specific cases. A s a consequence, they were constantly asking the legislature to re-affirm the grant, a request with which that body complied by passing various acts applying the same principles to particular municipal improvements. Acts of this character passed in 1793, in 1795, in 1796, in 1801 and in 1807, during which time similar powers were also granted one or two other municipal corporations.1 The act of 1807 made one important innovation: it appointed three commissioners for a term of four years with exclusive power to lay out streets, squares and public roads north of a designated line, the expense incurred to be assessed upon the property-owners intended to be benefited. 2. New York, 1813 to 1851. By 1813, the system of taxation by special assessment had progressed so far that the revised laws of that year authorized its application to the four cities of Albany, Hudson, Schenectady, and New York.' Of the four, New Y o r k had by far the most liberal and carefully drawn charter—an instrument which up to the recent consolidation act persisted as the basis of all its most important corporate powers. The charter made complete provision for supply ing the financial needs of the city arising from the expenditures for local improvements. Under it there were two separate procedures for imposing special assessments; one for the opening 1

Laws of New York, 1793, 3 Greenleaf, 5a; ibid., 1795, 3 Greenleaf, 244;

ibid., 1796, 3 Greenleaf, 332; ibid., 1801, chap. 129, p. 308; ibid., 1807, chap. U S . P- V1-

* Laws of New York, 2 R. L., chapters 51, 72, 76 and 86.

30

SPECIAL

ASSESSMENTS

[380

of streets and public places where the power of eminent domain is also involved; the other for the remaining street improvements—pitching and paving the streets, the construction of wharves and slips, sewers and drains, wells and pumps. F o r the former, action through commissioners of estimate and assessment duly appointed by the supreme court of judicature was necessary, their report to be confirmed by the same tribunal. F o r the last-named purposes, the council could itself appoint the assessors and confirm the report. In each case, the assessment was to be a lien upon the property benefited, and if the estimate proved too small, a re-assessment of the deficiency was permitted. E x c l u s i v e of a few minor changes, these charter provisions governing the exercise of the power of special assessment remained substantially intact until 1 8 3 9 . In that year and the y e a r following, acts were passed by the legislature amending the prodedure for making the estimate as previously established. 1 N o w , if interested parties objected to the report, the proceedings were to be ordered discontinued, and future estimates were to be made by commissioners selected one from names supplied by the corporation, one from names supplied by the parties interested, and one from the t w o lists combined. T h e s e commissioners were to state, in their report, each item of benefit and of damage separately instead of the resulting balance only, and were required to give notice by publication for hearing objections to the proposed assessment. T h e costs for the commissioners were to be taxed b y the court. T h e act of 1840 also prohibited the commissioners or assessors from assessing upon any house, lot, improved or unimproved lands, more than one-half the value of such property as valued by the assessors of the ward in which it might be situated. 1

Laws of New York, 1839, chap. 209, p. 1 8 2 ; ibid., 1840, chap. 326, p. 272. The minor acts mentioned were: Laws of New York, 18/6, chap. 81, p. 7 7 ; ibid., 181b, chap. :6o, p. 1 7 2 ; ibid., 1818, chap. 210, p. 196. Also Laws of New Yoik, 1S4/, chap. 1 7 1 , p. 143.

3

81 ]

SPECIAL

ASSESSMENTS

31

This, in brief, was the status of the system at the time when the convention was called to frame the constitution of 1846. While that body did not take any positive action giving distinct recognition to the power of special assessment, except in Art. V I I I , Sec. 9, which made it the duty of the legislature to provide for the organization of cities and incorporated villages, and " to restrict their power of taxation, assessment, borrowing of money," etc., yet there was a small element among the delegates hostile to the continuation of the system as it existed. This element, under the lead of Mr. Henry F . Murphy, a New Y o r k lawyer representing Kings county, introduced two propositions upon the subject, which were referred to the committee of the whole. 1 They were: Sec. 2. " No local assessment for any improvement in any city or village shall be laid unless a majority of all the owners of the lands to be assessed shall apply for such improvement, nor unless such improvement shall be ordered by a vote of two-thirds of the common council or board of trustees of such city or village." Sec. 2. " N o assessment for any improvement in any city or village shall be laid otherwise than by general tax upon the taxable property of such city or village, levied and collected with an annual tax for other expenses." Neither of these propositions was reported back to the convention. Had the one been incorporated into the constitution, the system of special assessment for benefit would have come to an untimely end; had the other been adopted, its usefulness would have been forever restricted. It is interesting in this connection to note the reasons for this opposition as they were set forth at length in a speech by Mr. Murphy. 1 He believed that the practice of assessing in any form for special benefit for any public improvement was unsound in principle, because it substitutes an arbitrary instead of a fixed rule of 1

Dibates

2

Debates, Argus eilition, p. S 1 0 .

in the Constitutional

Convention,

184b,

Argus edition, p, 357.

SPECIAL

32

ASSESSMENTS

[382

taxation. It is taxation ; and taxation, to be just, should be equal. N o public improvement can be made without being of special advantage to some locality; consequently the assumption that there is, in particular instances, a special local benefit, is false. It follows that the improvements which our corporations are continually making, involving the taking of property and taxation for the purpose of advancing the interests of a few individuals, are not public improvements, and should not enter into the consideration of this question. T h e cases which we are to regard are those in which the public are primarily interested. T h e sure test of an improvement being public is, that it may be paid for out of the public treasury; that the necessity for it is such that the whole public is willing to bear the expense of it. But the argument of Mr. Murphy was barren of result. T h e complaints at that time were much the same as they are to-day. T h e distinction between assessments and taxes had been formally recognized by the New Y o r k courts at least as early as 1813. 1 F r o m 1813 on, taxation by special assessment was constantly involved in numerous cases in which the constitutionality of the exercise of the power was scarcely questioned. T h e point of constitutionality was first vigorously attacked in Livingston vs. T h e Mayor, etc., of New Y o r k , and in the opinion of the court, it was as vigorously upheld.' This decision, however, was made under the old constitution. T h e question that now arose was this: Had the new constitution of 1846, notwithstanding all omission of direct prohibition, put into force any restrictions upon the legislature which might be expanded so as to cover special assessments ? The whole significance of the case of the People vs. T h e Mayor, etc., of Brooklyn, decided in 1851, and reversing a decision of the next inferior tribunal, lies in the fact that it answered this 1

T h e Mayor, etc., of N e w Y o r k vs. Cashman, 10 Johns., 96.

» 8 Wend., 85.

383]

SPECIAL

ASSESSMENTS

33

question in the negative, once and for all time, so far as the commonwealth of New York is concerned." The masterly logic of Judge Ruggles permanently disposes of all objection on the score of taking private property without just compensation, and places the system of special assessment firmly and solidly upon the foundation of the taxing power. The courts henceforth had to deal, not with the constitutionality of the legislative power, but with the interpretation of statutory provisions. § 3. New York since 1851. Subsequent legislation has had to do chiefly with three points in the development of the system in New York City, namely: (1) the limitation of the corporation in levying the assessment; (2) the distribution of the power of special assessment among the various municipal authorities; and (3) a statutory remedy for the taxpayer for fraud or error. First. An act of 1852 made permanent the existing grades of the streets, and required for further changes the consent of the owners of two-thirds of the abutting land.* In 1865, assessment bonds were authorized by which contractors might be paid as certain work progressed, the sum advanced to be later re imbursed the city from the proceeds of the assessment* A law of the same year permitted only one-half the expense of regulating, grading and improving the streets in the most northerly portion of the city, to be imposed upon the propertyowners benefited ;4 but two years afterwards, the commissioners were again allowed to assess the parties benefited by street openings to the entire extent that they might deem them benefited thereby.5 A legislative enactment of 1869 limited 1

4 N. V . , 419, over-ruling same case, 6 Barb., 209.

* Laws of New

York, 1832, chap. 52, p. 46.

* Laws of New York, 1863, chap. 381, p. 715. Laws of New

Yori, 1865, chap. 565, p. 1136.

' Laws of New

York, i86y, chap. 697, p. 1748.

4

SPECIAL

34

ASSESSMENTS

[384

the assessment for opening, widening or extending the streets that had been mapped out under the act of 1807, to not more than one-half the total cost of the improvement—if south of Fourteenth street, such part as might be deemed just and reasonable—provided always that such sum did not exceed one-half of the market value of such lands and premises. 1 In 1872, the provisions relating to the issue of assessment bonds, for the purpose of part payment for work in progress, were made general for all local improvements where the expense was to be assessed in whole or in part upon the propertyowners benefited, and assessment for repaying any street or public place prohibited upon property upon which an assessment had once been paid for the original paving of the same street or public place.' This latter prohibition was limited in 1873, s o a s to allow such assessment for repaving if petitioned for by the owners of a majority of the front feet of the real property on the line of the improvement.' Finally, a series of acts beginning 1876, extended the time for the payment of pending assessments, and permitted payment by installments with interest at a designated rate.4 Second. Proceedings for levying special assessments were at first to be instituted uniformly by the common council. In 1853, a "bureau of arrears" was established, with the duties previously performed by the street commissioner and comptroller in relation to advertising, selling and leasing lands for assessments, taxes and regular rents of Croton water and the redemption of the property sold.5 In 1857, the legislature created the offices of "commissioners of taxes and assessments " to have charge of assessments for local improvements ' Laws

of New

York, i8bg, chap. 920, p. 2406.

' Laws of New

York, 1872, chap. 580, p. 1 4 1 2 .

* Laws of New

York, 1873, chap. 335, p. 484. See also ibid., i S f j j , chap. 476.

* Laws of New York, 1876, chap. 103, p. 8 2 ; 1 bid., 1877, 1878, chap. 255. 5 Laws of New York, 1853, chap. 579, p. 1065.

chap. 1 5 9 ;

ibid.,

385]

SPECIAL

ASSESSMENTS

35

directly under control of the council.' In 1865, the whole matter of sewerage and drainage was given over to the exclusive direction of the Croton aqueduct board, with power to institute special assessments to defray the expenses incurred, and during the same year,' the commissioners of the Central Park secured the sole care, management and control of the streets mapped out in a certain specified district—a jurisdiction repeatedly enlarged by subsequent legislative action until 1870, when the department of public parks succeeded to all the powers and duties of the commissioners of the Central Park.* T h e year 1870 also saw the department of public works receive the powers hitherto belonging to the street commissioner and the Croton aqueduct board,' as well as the establishment of a board of street openings.' B y an enactment of the succeeding legislature, the board of health secured power to institute proceedings for special assessment for the drainage of lands.* T h e act to reorganize the local government of the city of N e w Y o r k , passed 1873, made but minor changes ; the most important of these was the stripping of the department of public parks of its authority over certain streets and boulevards and the conferring of that authority upon the department of public works.' Third. A statutory remedy for an unjust assessment was provided b y the legislature for the first time in 1858.* D u r i n g the session of that year, following as it did the year of the great ' Laws of New York, 1851, chap. 677, vol. ii., p. 497. 5

Laws of New York, /86j, chap. 381, p. 715.

• Laws of New York, 1865, chap. 564, p. II33; ibid., 1865, chap. 565, p. 1136; ibid., 1866, chap. 367,p. 818; ibid., 1867, chap. 697,p. 1748; ibid., 1S70, chap. 137, p. 366. 1

Laws of New York, /870, chap. 137, p. 366.

• Laws of New York, 1870, chap. 383, p. 881. • Laws of New York, 1S71, chop. 566, p. 1202. ' Laws of New York, 1S73, chap. 335, p. 484. • l aws of New York, i8j:8, chap. 338, p. 574.

SPECIAL

36

ASSESSMENTS

[386

b a n k i n g crisis, a law was enacted " in relation to frauds in assessments for local improvements in the city of N e w Y o r k , " imposing upon the supreme court the d u t y of hearing petitions for the vacation of any assessment on account of " f r a u d or legal irregularity," and in case the alleged fraud or legal irregularity was proved, to issue an order annulling the assessment and the lien created thereby. B u t a j u d g m e n t of this character was not to discharge the property-owner from liability to a re-assessment according to law for such amount as w o u l d otherwise have been justly chargeable. T h e legal effect o f this action was modified in 1870. 1 W h i l e hitherto the w h o l e charge was to have been removed whenever the assessment had been unlawfully increased, the j u d g e might n o w simply reduce the assessment upon the lands of the a g g r i e v e d party b y deducting the proportionate sum by which it had been so increased; nor was any fraud or irregularity in t h e proceedings to collect a special assessment by sale of the assessed premises to give grounds for anything more than a mere setting aside of such sale, leaving the respective rights and liabilities of the parties assessed and the municipal corpoTwo ration as unimpaired as if such sale had not been made. years later, a new law prohibited the court from vacating or setting aside an assessment for any omission to advertise or irregularity in advertising any proceeding relative to the improvement, for any omission of any officer to perform a duty imposed upon him, for any defect in the authority of any department acting in connection with the assessment, or for any irregularity or technicality except only in cases in which fraud should be shown, or in which the cost of repaving should be c h a r g e d against property-owners w h o had been assessed for the original paving. 1 In 1874, the law of 1858 was amended so as to allow the vacation of assessments for " fraud or sub1

Laws of New York, iSyo, chap. 383, p. 881.

* Laws of New York, 1872, chap. 580, p. 1412.

SPECIAL

3 «7]

ASSESSMENTS

37

stantial error " instead o f for " fraud or legal irregularity." 1 A t the same time, the statutory remedy was made the e x c l u s i v e remedy of the taxpayer, and the act of 1872 made to apply t o all improvements whatsoever, already completed or then b e i n g made or performed, or which should thereafter be made or performed. A g a i n in 1880, the legislature itself appointed commissioners to act as a board for the revision and correction of all pending assessments—an act intended to relieve the pressure upon the judiciary.* It declared, furthermore, that no existing provision of law should be taken to permit any court to vacate or reduce an assessment, in fact or apparent, thereafter confirmed, whether void or voidable, otherwise than t o reduce such assessment to the extent that it should be s h o w n to have been in fact increased in dollars and cents b y reason of fraud or substantial error; and in no event should that proportion of such assessment which is equivalent t o the fair value of any local improvement, with interest from the date o f confirmation, be disturbed for any cause. T h u s far had the system of taxation b y special assessment beeen evolved in its application to N e w Y o r k City at the time of the consolidation act of 1882. T h a t law made no great innovations. 1 Its purpose was to reorganize the municipal g o v ernment, and to codify the law relating to that c i t y ; the details of the system under consideration were not materially altered, and w e shall have occasion in another part of our w o r k t o examine it as a fully developed whole. In the meantime, the commonwealth of N e w Y o r k had not confined its grants of powers o f special assessment to its metropolis alone. O n e b y one, the other local authorities had similar provisions incorporated into their charters, until at present the system of taxation b y special assessment for benefit is the foundation 1

Laws of New York, 1874, chap. 312, p. 366.

1

Laws of New York, /SSo, chap. 550, p. 798.

• Laws of New York, 1882, chap. 410.

SPECIAL

3«

ASSESSMENTS

[388

upon which local improvements are erected in every municipal corporation within its jurisdiction. § 4. Massachusetts. An attempt has been made to find a precedent for special assessment laws in Massachusetts, in some of the enactments of the old general court during the colonial period.1 This attempt will not endure the light of criticism. The order of May 19th, 1 6 5 8 ' b y which a committee, appointed to lay out a way from Roxbury to Boston Farms, were " to judge what is meete satisfaction to the proprietors for the way and that they have power to impose an aequal part upon such of Boston or other tounes, as shall have benefit of such way," presents a question of distributing local burdens among local authorities, and not that of special assessment upon individuals. Similarly the laws of 1692* and 1760,4 respecting the construction of streets in Boston after devastation by fire, according to which certain expenses were to be assessed by a jury " in proportion to the benefit or conveniency any shall have thereby," evidently contemplated charging those only whose property had been increased by strips of land taken from other property owners. The many sewer and drainage acts beginning 1702, proceeded upon the theory that prevailed in England at that time; the sewers were regarded as the private property of abutting land owners, who were authorized to enforce a proportionable payment toward their cost from any person who should subsequently cut into them. Not until 1834 did the main sewers become public property, thus furnishing a basis for true special assessments' Of all the 1

Dorgan vs. City of Boston, 1 2 Allen, 223.

* Massachusetts Colcnial Records, iv., pt. I, p. 327. * 4 William and Mary, chap. I, Massachusetts Charter, p. 1. 4 4

33 Geo. II., chap. 3, ibid., p. 387.

Wright vs. City of Boston, 9 Cush., 233. For the acts themselves see 1 Anne, chap. 4, and 8 Anne, chap. 2, in Massachusetts Charter, pp. 142 and 1 6 1 ; also fVovince Laws, 3 Geo. III., chap. 27; Statutes 1841, chap. 1 1 5 ; Statutes 1855, chap. 105.

389]

SPECIAL

ASSESSMENTS

39

early laws of Massachusetts, that which most closely approximates a provision for special assessment was enacted in 1781.1 This was an act for widening and amending the streets, lanes and squares in that part of the town of Charlestown which had lately been laid waste by fire. It confirms the plan of a committee to lay out the streets in question, and provides that the parties interested join with the committee in the appointment of appraisers, who shall not only consider the advantages resulting to persons part of whose land is taken, but also determine the sum which the owner of any estate benefited by the execution of the plan ought to pay, for which sums the owners would then become liable. But as a system for raising revenue, special assessment was not firmly planted in Massachusetts until 1866, when the constitutionality of a law passed for that purpose the previous year was definitely affirmed.1 § 5. The Remaining New England Commonwealths. Of the remaining New England commonwealths, Rhode Island has maintained the constitutionality of special assessments since 1856. In that year its courts upheld a law enacted in 1854 authorizing the city of Providence to lay out, enlarge or straighten streets, no longer according to the old method, but in a manner provided in the act, namely, to assess not to exceed one-half of the expenses incurred upon persons interested in estates adjudged, in the first instance, by a board of commissioners, to be benefited by the improvement to that extent.® Similar charges, such as for building sidewalks or for constructing drains, had previously been authorized in Providence, but these were regarded chiefly as sanitary measures. In Connecticut the power to levy special assessments for street improvements was judicially affirmed in 1854/ A t that 1

Massachusetts

1

Dorgan vs. City of Boston, 12 Allen, 223, affirming act, 1865, chap. 159.

Special Laws, p. 21.

' Matter of Dorrance Street, 4 R . I., 250. 4

Nichols vs. Bridgeport, 23 Conn., 189; Cone vs. City of Hartford, 28 Conn., 363.

SPECIAL

4°

ASSESSMENTS

[390

time provisions of like character were contained in most, if not all, of the city charters in the commonwealth, either in respect to the laying out or improvement of streets or in respect to public parks, sidewalks, sewers and other municipal purposes. The highest court of Vermont decided in 1872 that municipal corporations might assess individuals for benefits derived from sewers, sidewalks, aqueducts, and the like.1 The laws of New Hampshire provided for the collection of similar charges for the construction of sewers in 1870,' and for sidewalks and street improvements five years later.* In Maine, too, a law of 1872 authorizes the assessment of damages arising front the laying out, widening or altering any new street in any city upon the owners of adjacent lots " in proportion as such lots are benefited or made more valuable by such laying out, widening, alteration or discontinuance."' § 6. Pennsylvania. Pennsylvania had something very similar to a system of special assessment enrolled upon her statutebook at the beginning of last century. By a province law of 1700, commissioners or assessors were to be appointed by the governor with four of his council for regulating the streets and water courses, the pitching, paving and graveling thereof; the clearing of docks and repairing landing places and bridges in the towns; and to defray the charge of pitching, paving, graveling and regulating the said streets, and scouring and cleaning said docks, each inhabitant concerned was to pay towards the same in proportion to the number of feet of his lots or landings adjoining on each or either side of the said streets or docks* A subsequent act of 1769 appointed commissioners for regulating, pitching, paving and cleaning the highways, streets, lanes 1

Allen vs. Drew, 44 Vt., 174.

* New Hampshire General Laws, 1878, chap. 78, sec. 7. * Ibid., chip. 78, sec. 3. 4

Maine Revised Statutes, 1884, chap. 18, sec. 31.

'Quoted by Read, J., dissenting, in Hammeit vs. Philadelphia,65 Fa. St., 146,

P- «57-

SPECIAL

ASSESSMENTS

41

and alleys, and for regulating, m a k i n g and amending the water courses and c o m m o n sewers within the inhabited and settled parts of the city of Philadelphia; but the e x p e n s e was to b e defrayed b y a special t a x on the basis of the general property tax. 1 A n d in 1790, the cost of street improvements w a s b r o u g h t expressly within the general property tax.* W h i l e the assessment of abutting property-owners for the expense o f street improvements thus lapsed in Philadelphia proper, y e t the various suburbs, as t h e y became incorporated, retained the old system. Such provisions are found in the acts incorporating Northern Liberties in 1803,' S p r i n g Garden in 1 8 1 3 / and K e n s i n g t o n in 1844.9 N o t until the consolidation act o f 1854 were special assessments for benefit for street improvements again introduced into Philadelphia,' and even then, scarcely a s a survival of the ancient colonial practice. F o r in the meanw h i l e , the city of Pittsburgh had been authorized b y acts passed in 1832 and 1833 to apportion the cost of opening streets upon the lot owners thereby benefited, and to m a k e them a lien upon the property, and these acts had been declared t o b e constitutional b y a decision handed down the following year.' In t h i s decision, moreover, w e have the statement of Justice R o g e r s that the principle o f assessment for benefit was at that time a new feature introduced into the Pennsylvania law from N e w Y o r k . T h e constitutionality of s u c h laws has been repeatedly affirmed b y Pennsylvania courts, s o that the doctrine is n o w solidly established in that commonwealth.* 1

Carey and Bioren's Pennsylvania

Laws, ijbg,

chap. 594.

* Carey and Bioren's Pennsylvania

Laws, J7QO, chap. 1498.

' Carey and Bioren's Pennsylvania

Laws,

* Pennsylvania 5

Pennsylvania

* Pennsylvania 1

Laws, /S/j,

18oj,

chap. 2354.

chap. 3703.

Laws, ¡844, chap. 215. Lawi,

1834, chap. 16, sec. 40.

McMasters vs. T h e Commonwealth, 3 Watts, 294.

» Schenley vs. City of A l l e g h e n y , 25 Pa. St., 128; City of Philadelphia vs. Tryon,. 35 Pa. St., 4 0 1 ; Schenley vs. City of Allegheny, 36 Pa. SL, 29.

SPECIAL

42

ASSESSMENTS

[392

§ 7. The Remaining North Eastern Commonwealths. The system of special assessments very naturally spread from its first abode in New York to the neighboring commonwealth of New Jersey. The grant to the city council of Newark under the charter of 1836, not long after the validity of such laws was first attacked, was held to be a perfectly proper legislative function and in no way repugnant to the organic law of the commonwealth.1 This decision was re-affirmed a few years later.1 The system has been widely developed in New Jersey, although of late years, since the reckless abuse of that power by some of her municipalities, not so much discretionary power has been left to the local authorities. In Maryland the first judicial recognition of special assessments came in 1847.' It was then held that the legislative act 1838, giving the city of Baltimore authority to impose upon the benefited property-owners the expenses of opening new streets and the ordinances passed to carry that authority into effect, did not offend against the constitutional provision prohibiting the taking of private property for public purposes without just compensation. The court sustained the law not only under the taxing power, but also under the right of eminent domain, and they quote copiously from the New York decisions, from which commonwealth the doctrine had evidently been derived. Taxation by special assessment has also received the sanction of congress so far as to adopt it for operation in the District of Columbia. By an act of 1865 power was conferred upon the corporation of the city of Washington to charge the expense of making street improvements upon the proprietors of adjacent lots, and this delegation of authority was supported by the supreme court of the United States as inseparable from 1

The State vs. Dean, 23 N. J . L., 335.

5

The State vs. City ol Newark, 27 N. J . L . , 185.

* Alexander and Wilson vs. The Mayor, etc., of Baltimore, J Gill, 383.

393]

SPECIAL

ASSESSMENTS

43

the exclusive legislative power over the district vested in congress by the federal constitution.' The same method of raising revenue has since been in constant use at the Capital City. A s early as 1857, the legislature of Delaware granted the city of Wilmington the power to levy special assessments for benefits resulting from certain designated street improvements.1 A detailed procedure was prescribed at the same time. The point of constitutionality has not yet been raised in the courts. Special assessments have also been provided for in West Virginia by the code of 1868.' The statute was under judicial interpretation in 1876, but its validity was not considered.' § 8. The Southern Commonwealths. When we come to investigate the subject of special assessments in the South, we find the system cropping out about the same time in two widely separated commonwealths—in Kentucky and in Louisiana. The course of legislation and of judicial interpretation in Kentucky has not been altogether harmonious. In 1837, the statute of 1 8 3 1 , amendatory of the charter of incorporation of the city of Louisville, and authorizing such impositions, was declared to be unconstitutional and void.5 The court argued that such charges, not being general and according to a fixed valuation, were not taxes, and not being taxes, they thus constituted an attempt to take property without adequate compensation. Not until three years later was a similar authority as applied to the city of Lexington upheld by the court, and then only by hypothetical construction of a quasi-municipal corporation out 1

Willard vs. Presbury, 14 Wall., 676.

* Delaware Kevised Statutes, 1874, chap. 73, sees. 63 to 68. ' Chap. 47. 4

For sidewalks only.

Douglass vs. Harrisville, 9 W. Va., 162.

* Sutton's Heirs vs. City of Louisville, 5 Dana, 28; quoted with approval in Rice vs. Danville, Lancaster and Nicholasville Turnpike Co., 7 Dana, 81.

SPECIAL

44

ASSESSMENTS

[394

of each separate square in the city. 1 In the decision of the court, Chief Justice Robertson says that all the streets had been made prior to the incorporation of the city; that most o f them had been graded and paved prior to the year 1826, and always in the mode then objected to as unconstitutional; and that he consequently deferred to precedent. 2 However this may be, the course of judicial interpretation was turned so as to permit the continuance and extension of the system previously threatened. 3 In Louisiana special assessments date from 1832. T h e legislature of that year thought proper to provide that the costs and expenses of opening new streets in the city of New Orleans which had been formerly, under the act of incorporation of the city, paid out of the public funds in the city treasury, should be thereafter paid by what are called assessments for benefits on the owners of lots adjacent to the newly opened street.4 This act was sustained in the courts in 1854, while, at the same time, a subsequent act of 1847, which merely repeated the old provisions as to taxation, was held to be unconstitutional under the new constitution of 1845, as lacking equality and uniformity. 5 T h e power was, however, soon judicially recognized even under the new constitution as to both street improvements and the construction of levees, for which purposes an extensive application of special assessments has been made. 6 T h e Mississippi courts in 1853 refused to declare unconsti1

City of Lexington vs. McQuillan's Heirs, 9 Dana, 513.

* Ibid., p. 523. ® See City of Covington vs. Boyle, 6 Bush, 204; Bradley vs. M c A t e e , 7 Bush, 6 6 7 ; Caldwell vs. Rupert, 10 Bush, 179. 4

Municipality No. 2 vs. White, 9 L a . A n . , 446, p. 450.

»Ibid. 6

See Municipality No. 2 vs. Dunn, 10 La. An., 5 7 ; Yeatman vs. Crandall, 11

L a . A n . , 220; Wallace vs. Shelton, 14 La. A n . , 4 9 8 ; Surgi vs. Snetchman, 11 L a . A n . , 387; City of N e w Orleans Praying for Opening of Streets, 20 La. A n . , 497

395]

SPECIAL

ASSESSMENTS

45

tutional the charter of A b e r d e e n of 1846, giving power to t h e c i t y authorities to l e v y an assessment upon any lot or lots for the purpose of making improvements on the streets in front of such lots. 1 T h e same principle was later enunciated in connection with the levee taxes* and again after the close of the civil war in relation to the provisions o f the constitution then adopted.* A recent decision of the highest c o m m o n wealth tribunal reads: " W e believe the power e x i s t s : it h a s been recognized as an existing power in the state b y the public, the legislature, and b y at least three decisions of this court." 4 In the charter granted Mobile in 1866, the legislature of A l a b a m a attempted t o confer power to make special assessments for street improvements according to the frontage o f abutting lots. W h e n issue was taken with this provision before the courts in 1871, it was held that the clause in the constitution of 1868 requiring all t a x e s t o b e assessed in e x a c t proportion t o the value of the property upon which it is levied, made that portion of t h e charter void and of no e f f e c t T h i s ruling h a s just been explicitly reversed. T h e question arose whether the act of 1885 giving Birmingham the p o w e r of special assessment for the construction of sidewalks w a s in contravention of the constitution adopted in 1875. T h e court argued that, inasmuch as no such thing as local assessments for commonwealth taxation was k n o w n either in 1875 or at any other time, the constitutional limitations attach e x c l u s ively to taxation for commonwealth purposes and d o not affect assessments levied b y municipal authorities.' 1

Smith vs. Corporation of Aberdeen, 25 Miss., 4J8.

* Williams vs. Cammack, 27 Miss., 209; Alcorn vs. Hamer, 38 Miss., 652. ' Daily vs. Swope, 47 Miss., 367. 4

Macon vs. Patty, 57 Miss., 378.

Mayor, etc., of Mobile vs. Dargan, 45 Ala., 310, and Mayor, etc., of Mobile vs. Royal Street Railroad Co., 45 Ala., 322. 5

'Mayor, etc., of Birmingham vs. Klein, 89 Ala., 461.

SPECIAL

46

ASSESSMENTS

[396

Similarly in T e x a s , the charter of Galveston in 1871 providing for a system of special assessment for benefit was held to be a valid grant b y the legislature in a decision handed down in 1875. 1 T h e same attitude was again taken by the court in respect to the charter given to Houston in 1883, when the latter was resisted as unconstitutional.* T h e highest appellate court of Virginia, in the middle of the seventies, upheld an assessment for paving levied b y the city of Norfolk according to the front foot.5 That was the first time the point of constitutionality had been raised in that commonwealth, but the conclusion then reached has since been several times affirmed.' S o also in Florida an act of 1877 conferring upon any city or town council power to make specified street improvements and " to charge upon those benefited such reasonable assessments as may be agreed upon," or in case of disagreement as ascertained and fixed by five discreet freeholders, has been sustained as entirely within the competency of the legislature.' T h e courts of Georgia have read the constitutional limitations upon taxation as referring to general taxation only, and have therefore upheld the constitutionality of an act passed in 1881 amending the city charter of Atlanta so as to allow special assessments for benefits resulting from street improvements' In North Carolina, too, it has been held that the class of taxes imposed only on those owners of property who derive a special benefit from a local improvement " are not within the 1

Roundtree vs. City of Galveston, 42 T e x . , 612.

* Taylor vs. Boyd, 63 T e x . , 533. ' Norfolk City vs. Ellis, 26 Gratt., 224. 4

Sands vs. City of Richmond, 31 Gratt., 5 7 1 ; R. and A . R . R . Co. vs. Lynch-

burg, 81 V a . , 473. ' Edgarton vs. T h e Mayor, etc., of Green Cove Springs, 19 Fla., 140. • Hayden vs. City of Atlanta, 70 Ga., 8 1 7 ; also First M. E. Church vs. City of Atlanta, 76 G a . , 181.

397]

SPECIAL

ASSESSMENTS

47

[constitutional] restraints put upon general taxation.'"

These

decisions, it is true, were occasioned b y the act o f 1881 prov i d i n g for the fencing o f t o w n s h i p s at the e x p e n s e of t h o s e benefited, but the reasoning and l a n g u a g e e m p l o y e d b y t h e c o u r t are most general in their character. In S o u t h Carolina, on the other h a n d , an act of the legislature authorizing the assessment o f the e x p e n s e o f o p e n i n g a street upon the lot-owners benefited w a s declared tional.'

unconstitu-

Chancellor D u n k i n maintained that the c h a r g e c o u l d

not be included under the right of eminent domain, since n o land w a s t a k e n ; that, l a c k i n g e q u a l i t y and certainty, it c o u l d not b e a t a x ; and that the w h o l e p r o c e e d i n g w a s at variance with the general principles o f taxation and w i t h o u t sanction in the usage of the country.

H e repelled a n y a n a l o g y w h i c h

m i g h t be drawn from an earlier act o f 1764 incorporated into the city charter of 1783, since the latter applied to sewers, drains and sidewalks only under the p o w e r to abate nuisances, and carefully preserved

the cardinal

proportionably

to

principle

the

value of

of

assessing

"ratably

and

lands

houses."

T h e act of 1850 introduced a new element b y di-

and

recting the commissioners in m a k i n g the assessment to " t a k e into consideration the a d v a n t a g e s to be derived from t h e improvement by the proprietors respectively."

It is this new ele-

ment to which the court denied their sanction. Several of the earlier decisions of the c o u r t s o f A r k a n s a s seem to imply assent to the doctrine o f special assessments,' but w h a t e v e r force these cases m a y h a v e been t h o u g h t to bear, h a s been

completely

undermined

by

a

subsequent

ruling.

In

1874 the framers of the new constitution e x p r e s s l y r e c o g n i z e d the principle in question, 1 but mis-stated t h e idea in rather con1

Cain vs. Commissioners, 86 N. C., 8 ; affirmed in Shuford vs. Commissioners,

86 N . C., 552. ' State vs. City Council of Charlestown, 12 Rich., 702. ' Washington vs. T h e State, 13 Ark., 752; McGehee vs. Mathis, 21 A r k . , 40. 4

" Nothing in this cons!i:u!ion shall l e so cor.struea as 10 prohibit the general

48

SPECIAL

ASSESSMENTS

[398

tradictory terms when they required such assessments to be "ad valorem and uniform." A s a consequence, when a case in point arose in 1877, the court declared an assessment for paving levied according to frontage unconstitutional and in conflict with that article of the constitution which requires taxation to be uniform and according to the true value in money. 1 The clause just cited was thereby construed to mean simply that taxes might be laid upon property in specially designated improvement districts, but within those districts must be equal and uniform according to the value of each tract assessed. In case value should be a just criterion of benefit, this proceeding might approximate a special assessment; in all other instances, the constitution has merely employed a misnomer to represent nothing more than a system of ordinary local taxation. In Tennessee the course of judicial interpretation has been very like that in Arkansas. A s early as 1845, a n ordinance imposing upon each owner of a lot the expense of constructing a foot-pavement in front thereof was upheld as valid legislation.* In a more recent decision,* however, the court has disapproved of all distinction between taxation and local assessment, and has held the latter to be distinctly forbidden by that article of the constitution which inhibits the taxation of property except according to its value. The charter granted Memphis in 1866, then, giving that municipality authority to assembly from authorizing assessments upon real property for local improvements in towns and cities, under such regulations as may be prescribed by law; to be based upon the consent of the majority in value of the property-holders owning property adjoining the locality to be affected; but such assessments shall be ad valorem and uniform." Constitution of Arkansas, 1874, art. X I X . , sec. 27. 1

Peay vs. City of Little Rock, 32 Ark., 31.

• T h e Mayor and Aldermen vs. Maberry, 6 Humph., 368, followed in Washington vs. The Mayor, etc., of Nashville, 1 Swan, 177; and Whyte vs. The Mayor, etc., of Nashville, 2 Swan, 3I4. * Taylor, McBean & Co., vs. Chandler, 9 Heisk., 349.

399]

SPECIAL

ASSESSMENTS

49

levy assessments for street improvements according to frontage, was held to be so far unconstitutional and void. § 9. The North Central Commonwealths. Special assessments for benefits resulting from street improvements were introduced into Michigan with the Detroit city charter of 1827. The constitutionality of that portion of the charter was affirmed in 1 8 5 3 b u t in i860, the method employed, namely, to require each lot-owner to pay the cost of the improvement in front of his lot, was held to be obnoxious to that principle of taxation which demands a regular apportionment of the charges imposed.' After this ruling of the court, Detroit went back to the plan of apportionment by front feet without securing an amendment to its charter; this proceeding was legalized by legislative action only toward the end of the sixties.3 The city charter of Cleveland, Ohio, which went into effect in 1836, provided for " a discriminating assessment" according to the benefit accruing from local improvements. When questioned in the courts, this authority was sustained as eminently valid.' Two years later a similar enactment was again affirmed with special reference to the recent constitution of 1851. 6 As the chief justice then said," laws of the character of those now drawn in question, are no novelty in this state. Their origin is nearly co-eval with our legislative history, and they have continued to multiply as occasion has required from that time to the present."* A series of acts commencing 1846, extended their application to the construction of turnpikes and drains.' 1 Williams vs. The Mayor, etc., of Detroit, 2 Mich., 560. • Woodbridge vs. City of Detroit, 8 Mich., 274. » Motz vs. City ol Detroit, 18 Mich., 495. • Scovill vs. City of Cleveland, I Ohio St., 126. s Hill vs. Higdon, 5 Ohio St., 2 4 3 ; affirmed in Ernst vs. Kunkle, 5 Ohio St., 520. • 5 Ohio S t , p. 244. ' Reeves vs. Treasurer of Wood County, 8 Ohio S t , 3 3 3 ; Foster vs Commissioners of Wood County, 9 Ohio St., 540.

SPECIAL

ASSESSMENTS

[4OO

In Illinois, the course of legislation for special assessment has not been uniform. The city of Chicago, from its first incorporation in 1837, has continued to possess authority to charge the expenses of local improvements upon the propertyowners benefited. Under the charter of 1837 and 1851, this assessment was to be specifically by benefits, and action thereunder was incidentally recognized by the courts. 1 The charter revision of 1863 changed the rule of estimation from benefits to frontage. Assailed before the courts, this plan of assessment was declared to be unconstitutional; that is to say, it was intimated that the only legal method of levying assessments was by benefits.2 Accordingly, this latter rule of estimation was re-instated by the charter of 1865 and once more judicially sustained.' To obviate all difficulty in the future, the constitution adopted by the commonwealth of Illinois in 1870, expressly recognized the power of special assessment.' This clause has been held to have done away with any constitutional restrictions which might previously have existed, and to permit the assessment to be made according to frontage whenever the legislature might deem that a proper criterion of benefit. 5 In Indiana provisions for special assessments for street improvements have been traced in the early special charters of 1 Canal Trustees vs. The City of Chicago, 12 111., 403 ; Chicago vs. Baer, 41 111., 306.

* City of Chicago vs. Larned, 34 111., 203; extended to sidewalks in Ottawa vs. Spencer, 40 111., 211. ® Wright vs. City of Chicago, 46 111., 44. 4 " The general assembly may vest the corporate authorities of cities, towns and villages with power to make local improvements by special assessment or by special taxation of contiguous property or otherwise." Constitution vf Illinois, 1870, art. IX., sec. 9.

»White vs. The People ex rel.. City of Bloomington, 94 111., 604; Falch nr. The People ex rth, Johnson, 99 111., 137.

4oi]

SPECIAL

ASSESSMENTS

51

various towns: those of Lawrenceburg and Vevay of 1 8 4 6 ; that of Peru of 1848. 1 A n act of 1857 gave the city of Indianapolis the power to impose such charges upon the abutting property-owners,* while already in 1852 similar assessments had been authorized by the legislature for benefits resulting from the construction of levees and drains.' The act incorporating the city of Milwaukee, Wisconsin, in 1846, gave the local authorities power to impose a special charge upon lots in the city to defray the expense of opening, grading, improving and paving the streets and building sidewalks and crosswalks in front of such lots. The system was very early extended to include the benefit resulting from the construction of piers along the lake-water, and its validity has been repeatedly judicially affirmed. 4 Special assessments were authorized in Missouri as early as 1853. From the very first, they have there maintained the support of the judicial tribunals.9 In Minnesota special assessment for benefit was at one time forbidden by the constitution. A n act passed in 1861 authorizing the cost of a local improvement to be apportioned by commissioners "upon the real estate by them deemed benefited in proportion to the benefits resulting thereto," was held to be beyond the constitutional power of the legislature and consequently void.' This was in 1863. But the necessity of some such system of raising revenue in the rapidly growing cities of the West was soon felt to such a degree that, ' Palmer vs. Stumph, 29 Ind., 329. 1

City of Indianapolis vs. Mansnr, 1 5 Ind., 1 1 2 .

® Anderson vs. The Kerns Draining Co., 14 Ind., 199 1

Lumsden vs. Cross, 10 Wis., 2 8 2 ; Weeks vs. City of Milwaukee, 10 Wis , 2 4 2 ;

Soens vs. City of Racine, 10 Wis., 2 7 1 ; Bond vs. City of Kenosha, 17 Wis., 284. ' Garrett vs. City of St. Louis, 25 Mo., 505. •Stinson vs. Smith, 8 Minn., 366.

52

SPECIAL ASSESSMENTS

[402

finally, in 1869, an amendment was secured to the constitution enabling the legislature to delegate such power to the municipal corporations. 1 Under the amended constitution, the system has found judicial support. 2 In Iowa the doctrine of special assessments appears already in 1855 and 1856, when charters of incorporation were conferred upon the towns of L y o n s and Mount Pleasant.3 Here their constitutionality has been upheld, not on the ground of the specific benefits derived, but upon the broad basis of the taxing power, and as approximating both the equality and the uniformity demanded by the principles of taxation. § 10. The North Western Commonwealths. A m o n g the northwestern commonwealths, Kansas, as the oldest and first settled, leads in the introduction of special assessments. T h e city of Leavenworth acquired authority for that purpose with its charter of 1864.4 W h e n questioned in the light of the constitutional restrictions upon taxation exisiting in that commonwealth, the legality of that portion of the charter was promptly vindicated, the basis of the argument of the chief justice being " that under the general grant of power the legislature may authorize charges upon adjacent property for improvements of streets and alleys, and is not bound by the first section of the eleventh article of the constitution to require that such charges shall be equal and uniform throughout the whole city." 5 1 " A l l taxes to be raised in this state shall be as nearly equal as may be, and all property on which taxes are to be levied, shall have a cash valuation, and be equalized and uniform throughout the state. Provided, that the legislature may, by general law or special act, authorize municipal corporations to levy assessments for local improvements, upon the property fronting upon such improvements, or upon the property to be benefited by such improvements, or both, without regard to a cash valuation, and in such manner as the legislature may prescribe." Constitution of Minnesota, art. I X . , sec. 1, as amended November 2nd, 1869.

State vs. District Court of Ramsey County, 33 Minn., 295. T h e B. & M. R. R. Co., vs. Spearman and City of Mount Pleasant, 12 Iowa, 1 1 2 ; Warren vs. Henly, 31 Iowa, 31. 4 Hines is. Leavenworth, 3 Kan., 186. 5 Hid., p. 202. 2 3

403]

SPECIAL

ASSESSMENTS

53

In Nebraska special assessments have been authorized since 1873. In that year an act passed by the legislature gave the city council of Omaha power to assess one-half the expense of grading a street upon the abutting lot-owners. This act was declared to be constitutional under then then-existing constitution.1 When, in 1875, the organic law was revised, largely upon the model of that but recently adopted in Illinois, it, too, was made to include a clause giving distinct approval of the system of special assessment.* This clause has been held to be exclusive, in so far as to require assessments for local improvements in cities, towns and villages to be made, if made at all, " in proportion to the benefits received.'" But Colorado is another commonwealth in which the principle of taxation by special assessment for benefit has been judicially repudiated. In thus repudiating the principle, the court based their action upon peculiarities of the constitution there in force.4 According to their construction of that instrument, there is but one mode of taxation provided by the constitution of Colorado, and that is by a uniform levy upon all property according to a just valuation. The right to impose special assessments under the taxing power could not, therefore, be sustained. But while expressing these views upon the general question, the court showed no hesitation in falling back upon the old cover of police power in order to uphold such an assessment for the construction of a sidewalk. In this loop-hole they have left a convenient path for retreat—a path which the local authorities in Colorado have not been averse to utilize.' 1

Hurford vs. Omaha, 4 Neb., 336.

* " The legislature may vest the corporate authorities of cities, towns and villages with power to make local improvements by special assessments or by special taxation of property benefited." Constitution of Nebraska, 1875, art. IX., sec. 6. 'State vs. Dodge County, 8 Neb., 124. * Palmer vs. Way, 6 Col., 106. 6

Special assessments according to benefits from sewers permissible: Keese vs.

54

SPECIAL

ASSESSMENTS

[404

The remaining northwestern commonwealths have but lately been promoted from the status of territories. The Dakotas, before their separation, enacted in 1887 a general law authorizing the city council of any city to make assessments for local improvements upon property adjoining or benefited thereby.1 This act was subsequently adopted by both North Dakota and South Dakota respectively. The same year marks the date of the operation of general acts with similar provisions passed by the legislature of Idaho,2 of Montana,3 and of Wyoming. 4 § 1 1 . The Coast Commonwealths and Territories. From the commencement of her career as an American commonwealth, California has adhered to the doctrine of special assessment for benefit. The first charter of San Francisco,5 as well as the revisions of 1851 and 1855, provided for street improvements at the expense of the property-owners benefited and for imposing the charges in proportion to such benefits. In 1856 the rule of estimation according to frontage was introduced; in 1859 that according to valuation. Two years later recourse was had once more to assessment by the front foot, which method is still retained.6 These laws have been upheld by a series of judicial decisions, the first one of importance having appeared in 1859 in relation to an act of 1853 which gave the city of Sacramento power to impose special assessments.7 The system was confessedly borrowed from New York. 8 The constitution of California went so far as to put constitutional restrictions City of Denver, 10 Colo., 112; and City of Pueblo vs. Robinson, 12 Colo., 593; but not for curbing and guttering apart from sidewalks : Wilson vs. Chilcott, 12 Colo., 600. 1 Compiled Laws of Dakota, 1887, sees. 959 to 999. 2 Idaho Revised Statutes, 1887, title X I I I . , sec. 2230, § 23. ® Montana Compiled Statutes, 1888, division V., chap. 22, sec. 430. 4 Wyoming Revised Statutes, 1887, title I V . , chap. I, sec. 1 6 1 : for Cheyenne 5 1850. only. 6 Emery vs. San Francisco Gas Co., 28 Cal., 345. 7 Burnett vs. City of Sacramento, 12 Cal., 76; Blanding vs. Burr, 13 Cal., 343. 8 Taylor vs. Palmer, 31 Cal., 240, p. 254.

SPECIAL

4°5]

ASSESSMENTS

55

upon the procedure which might be prescribed by the legislature in cases of special assessment. T h e clause in question 1 proved to be a greater hindrance to improvement than a protection to the taxpayers, and, as the result thereof, it was repealed in November, 1884. Tn Oregon the system of special assessment has long had judicial as well as legislative sanction. In the charter of the city of Portland,* the legislature inserted a provision giving the municipal authorities power to apportion the expenses incurred for improving a street upon the owners of adjacent lots, and this act was in 1865 declared by the courts to be a rightful exercise of legislative authority and in complete conformity with the constitution.* T h e original method of defraying the cost of street improvements in the incorporated villages and towns of Nevada was by a special tax levy upon the regular valuation of the property within a specially created improvement district. In 1881 all restrictions as to the manner of apportionment were abolished, so that the assessment may now be made according to the benefits conferred. 4 Washington, while yet a territory, was restricted by her organic act from levying impositions, otherwise than according to value.* T h e constitution of 1889, however, expressly ' " No public work or improvement of any description whatsoever shall be done or made in any city, in, upon, or about the streets thereof, or otherwise, the cost and expense of which is made chargeable or may be assessed upon private property by special assessment, unless an estimate of such cost and expense shall be made, and an assessment in proportion to benefits on the property to be affected or benefited shall be levied and collected and paid into the city treasury before such work or improvement shall be commenced, or any contract for letting or doing the same, authorized or performed." Constitution of California, 1879, XI., sec. 19. ' Incorporated 1851. 4 Nevada

' King vs. City of Portland, 2 Ore., 146.

General Statutes, rSSj, sec. 3052; sec. 2024.

»City of Seattle vs. Yesler, I Wash. Terr., 571.

SPECIAL

56

ASSESSMENTS

[406

authorizes the legislature to vest the corporate authorities of cities, towns and villages with power to make local improvements b y special assessment of the property benefited. 1 This authority has already been employed in a general municipal corporations act." 2 Utah, too, has made application of the system of raising revenue under consideration. A s early as 1865, Salt L a k e C i t y received power to levy special assessments for street improvements to be assessed b y commissioners upon the property in prescribed districts " in proportion to the benefit resulting thereto." 8 Similar provisions are contained in the general act governing municipal corporations passed 1888.* § 12. Summary. In summing up w e find that of the fortyfive commonwealths which now comprise the Union forty, together with one territory, have given legislative or judicial approval to the doctrine of special assessments. T w o 5 of the four dissenting commonwealths allow such impositions for such purposes as m a y be included within the police power of the state, while one other 6 has made at least an apparent attempt to authorize such action b y constitutional provision. S i x commonwealth constitutions have given express recognition to the system,' only four of which are at present in effective operation. T h e small number of exceptions to the general rule thus adduced warrants us in maintaining that special assessment for benefit is a distinctive feature of A m e r i c a n public finance. 1 " T h e legislature may vest the corporate authorities of cities, towns and villages with power to make local improvements by special assessments or by special taxation of property benefited." Constitution of Washington, iS8ç, art. V I I . , sec. 9. 2 8

Hill's Statutes of Washington, Utah Compiled Statutes,

I8Ç2, title I X . , chap. 3, sec. 520.

1888, chap. 10, sec. 390.

4

Ibid., chap. II.

6

South Carolina and Colorado.

6

Arkansas.

' Arkansas, California, Illinois, Minnesota, Nebraska, Washington.

CHAPTER III SPECIAL ASSESSMENTS IN PRACTICAL OPERATION § i . Analysis of Systems of Assessment. The various systems under which special assessments are actually levied in our American municipalities bear a general resemblance to each other, although they differ widely in many important points. If we seek to analyze them, we shall find that the numerous provisions naturally fall under ten distinct headings. First, we inquire into the purpose of the assessment. Secondly, we ask what conditions must be fulfilled in order to give the assessing body legal jurisdiction. Thirdly, what kinds of notice and hearing are required, and at what stage of the proceedings. Fourthly, the subjects assessed, or rather the property included within the assessment district. Fifthly, the rule of estimating the benefits to the property thus included. Sixthly, the limitations upon the amount of the levy. Seventhly, how and by what action the sums assessed are made final charges against the parties benefited. Eighthly, the legal nature of these charges. Ninthly, the methods of collection. Tenthly, what, if any, statutory changes have been engrafted upon the taxpayers' ordinary remedies for illegal assessments. It will aid us materially in our study if we obtain a clear view of some particular system in practical operation before w e concern ourselves with the local variations and abuses or defects. This once accomplished, these variations may be the more easily understood. The typical system—if we can call any one system typical—is that of New Y o r k City. Some of its provisions trace their origin back to the charter of 1813, and since then have been constantly and repeatedly amended, 407]

57

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ASSESSMENTS

adapted and reformed. The New York system, moreover, has long been successfully applied in raising revenue for many vast municipal improvements, and has been moulded especially with reference to its practical working. § 2. Special Assessments in New York City. There are two distinct and separate administrative systems in force in the city of New York, by which special assessment proceedings may be conducted. These two systems are exclusive, not concurrent. Whether an assessment should be levied by the one method or by the other depends entirely upon the purposes for which it has been authorized. The line of cleavage seems to be the excrcise of eminent domain. That is to say, the opening, widening, straightening and closing of streets, involving the taking of private property, must be undertaken in connection with certain legal formalities before the courts, and consequently come within the sphere of the law department and the board of street openings. In the remaining cases for which special assessments are authorized by law—for building wells and cisterns, erecting pumps, pitching, paving, regulating and repairing streets, relaying pavements, constructing sewers, raising, reducing, leveling or fencing vacant lots and public slips—in these cases, the assessment for benefits is under the control of the board of assessors and the board of revision and correction. In one respect the line appears to have been illogically drawn; for where, in changing the grade of a street, the abutters' property rights are injured and an award for damages rendered necessary, the proceeding, although analogous to that for laying out new streets, comes nevertheless within the province of the board of assessors, instead of that of the law department. The various steps required for levying these two classes of assessments have very little in common. W e shall do well to consider each method separately. § 3. Assessments for 'Street Improvements. First, then, the regular assessments for street improvements and the like. The improvement itself is carried out by the proper municipal de-

409]

SPECIAL

ASSESSMENTS

59

partment, upon either its own initiative or that of the common council, as the statutes may provide. Only after the work has been entirely completed does the chief of the department under which it has been done certify the cost of the same to the board of assessors. T h e board of assessors consists of four disinterested persons, whom the commissioners of taxes and assessments are authorized to appoint from time to time. It is their duty, upon receipt of the certificate of cost of any improvement, to send such certificate to the city comptroller for an indorsement of the interest chargeable upon such advances as the city may have made during the progress of the work. W h e n this certificate has been returned to them with the interest added, they proceed to assess the amount shown upon its face to have been expended, or so much thereof as has been duly ordered, upon those property-owners to whom the special benefits of the improvement are to accrue. 1 T h e board of assessors determine both the area of the assessment district and the extent of the benefits within the area, unless a permanent area has been previously fixed.* F o r their guidance in determining the area, the law lays down the rule that it should include all lands and premises deemed to be benefited. Property owned by the city forms no exception. Within the assessment district the charge is apportioned according to the individual benefit, subject to two limitations, namely, first, that the charge does not exceed the benefit, and second, that it be no greater than one-half the assessed valuation of the property affected. T h i s is the procedure which the letter of the law seems to prescribe. T h e board of assessors, however, read the statute more liberally. W h a t they in fact do, is this. W h e r e the district as determined includes only such property as abuts upon the improvement in question, they divide the 1 If a street has been once payed at the expense of abutting owners, an assess, ment for repaying can be made only upon petition by the owners of a majority of the front feet on the line of improvement. 1

E. g., sewer districts.

60

SPECIAL

ASSESSMENTS

[410

cost among those chargeable in the ratio of the frontage of the property assessed. Should the district include lands not within this rule, the various parcels are laid off into strips or zones in accordance with their comparative proximity to the work. The board proceed upon the theory that the degree of benefit varies inversely with the distance from the line of the improvement. The abutting property is then assessed at so much per front foot or per square foot, the next nearest zone at a less rate, and the other zones proportionably. Where, however, the change of grade of a street involves damages for which awards must be made, the board of assessors make the assessment separately upon each property-owner, after first giving notice and hearing whatever evidence may be offered. Upon the completion of the assessment roll, the board are required to give notice by publication for ten days successively, requesting all parties interested to present written objections within a period of thirty days. They may at the expiration of that time alter or modify the assessment list as they may see fit. If objections still remain, they are to be reported with the assessment to the board of revision and correction. This board, made up of the comptroller, recorder and corporation counsel, have power to consider the objections upon their merit, to subpoena and examine witnesses, and either to confirm the assessment or to send it back to the board of assessors for revision. The lapse of thirty days after receiving the report without action is equivalent to confirmation, and confirmation makes the assessment a final charge upon the property, subject, of course, to review by the regular courts upon petition. § 4. Assessments for Street Openings. Proceedings for the opening of new streets are instituted regularly by the board of street openings and improvements. After the particular work has been duly determined upon, and after notice of the same has been duly given by publication, application is made to the supreme court for the appointment of three commissioners of estimate and assessment, whom the

4

jl]

SPECIAL ASSESSMENTS

61

judges are to select in a manner prescribed by statute from two lists of names submitted by the property-owners and by the city respectively. The commissioners qualify for their duties and are allowed four months for the performance of their work, unless the time is extended upon application to the court which appointed them. The commissioners, after viewing the premises to be taken and listening to such of the interested parties as desire to be heard, make up their report upon the damages and benefits involved. They must necessarily themselves determine the district of benefit if it is to include lands not actually abutting upon the proposed street or public place. The damage inflicted and the benefits accruing are separately determined, and all the expenses of the proceeding are assessed upon the property owners in the way of benefits, provided the body originally instituting the same have not ordered a specified portion of the cost to be defrayed by the corporation itself. The assessment for benefit, then, is really levied in the ratio of the excess of benefits over damages. All these separate items must be shown in the report, together with diagrams of the proposed improvements and a tabulated abstract of the estimate and assessment. When completed, the abstract is deposited by the commissioners, along with any documentary evidence upon which it may be based, with the commissioner of public works, forty days before they intend to report to the court. The commissioners of estimate and assessment give notice by publication for thirty days, stating their intention to present their report for confirmation at a specified time and place, and that they will hear within the ten days just succeeding the thirty days after the first publication of the notice any objections thereto presented in writing. After making any just alteration or correction, the assessment is reported to the court. If, upon the coming in of such report, persons interested therein either by assessment for benefit or by award of damages still object to items aggregating more than one-half the total, then all further proceedings in the

62

SPECIAL

ASSESSMENTS

[412

matter must be discontinued, if such persons so desire. Otherwise after listening to any complaints that may be alleged against the report, the court either confirm it or remand it once more to the commissioners for correction, and so on until a report is secured that deserves confirmation. § 5. Collection and Application of Assessments. From the date of their confirmation, the various assessments for benefit become both liens upon the property benefited and personal liabilities of the owners. Notice of such confirmation must b e given by the comptroller by public advertisement for ten days. If unpaid sixty days after entry upon the records, the charges begin to bear interest at the rate of seven per cent, per annum. Assessments for certain designated improvements, however, are payable in yearly installments each of five per cent, of the total amount charged, with seven per cent, interest upon the sums still unpaid. Whenever any assessment remains unpaid for three years, the comptroller is required to direct the clerk of arrears to proceed to collect the same by public sale according to law. It is to be noted that, except in certain cases of street openings, the assessment is not to be made until after the expenses of the improvement, from which the benefits flow, have been incurred by the corporation. The time elapsing between the completion of the improvement and the confirmation of the assessment, is frequently of considerable duration. These immediate liabilities on the part of the city are met by payments of money realized from the sale of improvement bonds. Bonds of this kind may be issued by the comptroller at not less than par, and for a period not exceeding ten years, upon due authorization. The moneys payable upon these assessments are turned over, as they come into the city treasury, to the commissioners of the sinking fund, and by them applied toward the amortization of the municipal debt. § 6. Remedies of the Taxpayer. The usual common law remedy open to the taxpayer aggrieved by an irregular or frauduent

413]

SPECIAL

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63

assessment is to secure a review of the proceedings upon a writ of certiorari returnable to the proper court. This method, as applied to assessments laid by the board of assessors, has been entirely supplanted in New York City by the exclusive statutory remedy of a petition for the abatement or reduction of the assessment. Such petition will be entertained by the supreme court only where fraud or substantial error can be proved. The courts are absolutely prohibited from reducing any assessment to a greater extent than it may be shown to have been increased by such fraud or substantial error. In no instance are they allowed to disturb that portion of the assessment which is equivalent to the fair value of the local improvement. Besides this direct method of contesting an illegal assessment, there are two less direct remedies which may be employed by the taxpayer. First, he may pay under protest and then bring an action to recover the money thus paid. This is a rather dangerous pursuit; for whenever the payment has been voluntarily made with knowledge of all the facts and without the stress of coercion or threats amounting to the same, the courts will scarcely allow a recovery. Secondly, he may refuse payment and suffer the sale of his property for the delinquent assessment to proceed, and afterward dispute the title of the purchaser should the latter seek to enforce his claim to possession. The courts hesitate to give equitable relief so long as justice is attainable by the regular legal proceedings. § 7. Local Variations: Purposes; Acquiring Jurisdiction. While the New York system may be said to be in a certain way typical, not every American city is supplied with a similar duplicate procedure. It is true that the taking of land by expropriation must everywhere follow a prescribed judicial process, but there is no necessary connection between the assessment for damages and the assessment for benefits. So a number of municipalities—Baltimore, Boston, Cleveland,

64

SPECIAL

ASSESSMENTS

[

4

j

4

Washington'—have regularly but one set of assessment officials. The new Massachusetts statute, providing for special assessments in Boston, is extremely careful to separate the two operations of assessing for damages and for benefits.' Wherever the duplicate system does exist, the procedure for opening streets approximates as closely as possible the ordinary judicial process required in the exercise of eminent domain. But even where there is really only one method of levying special assessments, there may be several different ways of setting the machinery in motion. The power to initiate such proceedings may be concentrated in the common council or legislative body, as in Chicago, Cleveland, New Orleans, Omaha, Philadelphia, San Francisco, Washington; or it may be delegated to the executive departments, as we have seen to be the case in New York, as also in Boston and Jersey City, usually the department of public works or board of street commissioners. The prevailing tendency seems to be toward a simplification and centralization of this power. The purposes to which the American municipalities apply their system of special assessment are in general the construction and improvement of streets. Nearly all of them are authorized to charge the expenses of opening new streets, of laying pavements, of constructing sidewalks, of grading and changing grades, and of building sewers, upon the propertyowners thereby benefited. What they are authorized to do, and what they actually do, are, however, not always identical. Baltimore, for example, has power to assess the cost of various street improvements upon the abutting property-owners, but in fact does so only in respect to opening streets and constructing foot ways. Chicago, Philadelphia and St. Louis are empowered thus to levy the expense of laying water pipes, but St. 1 But special acts have provided special assessment tribunals, e. g., act of congress, Sept. 27th, 1890.

' Act of 1891, chap. 323, as amended by act of 1892, chap. 418.

SPECIAL

ASSESSMENTS

65

Louis makes no use of this power. In Chicago the cost of erecting lamp posts is included in the same category. On the other hand, several cities—Cleveland, Minneapolis, Omaha, St. Louis—may impose special assessments for the purpose of street sprinkling. Cincinnati once levied such assessments for street lighting, and Cleveland is authorized so to do. Assessments for street lighting are now almost unknown; they, as also the charges for street sprinkling, seem to fall upon the very border line between the field of assessments and that of fees and tolls. In many instances, numerous safeguards are thrown about the taxpayer, in order to protect him against hasty action on the part of the body authorized to impose assessments for benefit. Of this nature are the various restrictions upon the acquirement of jurisdiction to act. Of course, the real test of authority is the ultimate power to order an assessment, in spite of the opposition of those who are to be charged. In Boston, Chicago, New Orleans, Philadelphia, Washington, the wishes of the parties immediately interested need not necessarily be consulted. No petition is required for valid action. Other systems offer alternative proceedings; in Jersey City, and for certain purposes in Cleveland, there must be either a petition of the owners of a major portion of the property to be affected, or the improvement must be ordered by an increased vote of the legislative body. In order to give jurisdiction in St. Louis, there must be either a recommendation from the board of public improvements, or a petition from the propertyowners; and if the recommendation be accompanied by a remonstrance of any of the interested taxpayers, then the passage of the ordinance requires a two-thirds vote of the assembly. A petition may be absolutely necessary for assessments for all or for particular purposes, as in Baltimore, Cleveland, New Orleans, Omaha, or a remonstrance may utterly oust jurisdiction to act. For example, under the system employed in San Francisco, if, after the passage of an ordinance proclaiming the intention of the council to order a local im-

66

SPECIAL

ASSESSMENTS

[4i6

provement, the owners of a majority of feet frontage remonstrate in writing, jurisdiction for that improvement is ousted for six months, unless such majority petition therefor; but no remonstrance will hold where the assessment does not affect property in more than two blocks. §8. Notice; Subjects Assessed; Rule of Estimation. As regards the notice and the opportunity of a hearing for the taxpayers, the usual method is to give notice of an intention to order a local improvement before any arrangements whatever are made for carrying out the work. This is done in Baltimore, Boston, Chicago, Jersey City, New Orleans and San Francisco. Its purpose is simply to enable protests to be entered against the whole undertaking. Either with it is coupled a statement of a time and place where the commissioners of assessment will hear evidence as to benefit, or a second notice is given at a later period. In St. Louis this notice and hearing are given by the board of public improvements before they recommend the work to the council. In Cleveland, the objectionable items are referred for equalization to a special board of equalization, while in Omaha, the council themselves act in that capacity. By the Chicago system, the estimate is made by " three members of the council or other competent persons"—in reality, the engineering department— and on approval of their report by the council, the latter file a petition in the county court for proceedings to assess the cost on the property-owners benefited. The court thereupon appoint three competent persons as commissioners to apportion the assessment. These commissioners must then give to the interested parties notice of the assessment and of the term of court at which a final hearing thereon will be had, and if objection be filed, the disputed points are submitted to a jury. As has been before pointed out, wherever the exercise of eminent domain and the assessment for benefit are indissolubly connected, the proceedings follow the regular course of judicial determination.

417]

SPECIAL

ASSESSMENTS

67

There are, on the other hand, a number of cities in which no notice need be given the property-owners until after the amount of the assessment has been fixed. This is the case in Omaha when assessments are laid for plank sidewalks, and in New Orleans when the purpose is to defray the cost of drainage. In Washington the taxpayer may not hear of the assessment until he is in fact presented with a tax bill for the same. The same is true with regard to assessments for sewers and water pipes in Philadelphia. The explanation of this situation in Philadelphia is found in the fact that, as the amount of the assessment is fixed by statute, no relief could be obtained by a hearing upon the proportionable benefits accruing. The party assessed, by resisting all attempts to collect the charge, may secure a judicial decision upon the legality or illegality of the assessment, but has no opportunity to attack the relative amount of benefits assessed. The rule most commonly applied in fixing the assessment district is that of including all contiguous property to which benefits are supposed to accrue from the improvement in question. In Washington, New Orleans and Boston the property assessed must abut upon the line of work whose cost is sought to be thus defrayed. All such property is usually assessed; that is to say, the city pays its share upon whatever municipal property may be comprised within the assessment area. A n exception is found in Philadelphia; here only such real property is assessable as is also subject to the general property tax. The end aimed at in assessing each parcel within the district, is to ascertain the approximate benefits resulting thereto. As an index to this benefit the foot-front rule is employed wherever applicable. T h e practice of laying the lands off into zones, and subjecting them to different rates, as we have seen to exist in New York City, is frequently met elsewhere. In some cities, as in Philadelphia, a certain deduction is made in favor of corner lots. Assessment according to superficial area

68

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ASSESSMENTS

[418

is practiced now and then in levying upon sewer districts. For street openings and improvements of like nature, the universal rule is to estimate the particular benefit to each parcel. § 9. Limitations on Amount; Confirmation and Legal Nature. The amount of the levy may be limited by statute in several ways. First, it may be absolutely fixed. This is the case in Philadelphia in respect to assessments for sewers and water pipes. The sum charged must be so much per front foot—no more, no less.' Second, the maximum charge may be determined in advance. As examples, we have assessments for sewers in Boston and in Cleveland* Third, the ratio of the assessment to the value of the property may be fixed. Cleveland and St. Louis are authorized to impose the cost of local improvements upon the benefited proprietors, only to the extent of twenty-five per cent, of the fair valuation of the property. The restriction upon the authorities of San Francisco is placed at fifty per cent, of the value. Fourth, the portion of the cost of the improvement chargeable upon the property-owners may be limited. In Washington, one-half the expense is defrayed by special assessment, and the other half by congressional appropriation. In Cleveland, too, at least one-half of the cost of repaying streets, and one-fiftieth of the cost of other public works, must be borne by the city at large. Fifth, the statute may require certain designated items of expenditure to be deducted from the sum otherwise assessable upon private parties. The usual form of this restriction is found in provisions by which the defrayal of the cost of improving street intersections is withdrawn from the system of special assessment. This is the case with Cleveland, New Orleans and Omaha. Similar in scope is the clause in the charter of the last-mentioned city, which specially imposes 1

Sewers, $ 1 . 5 0 ; water pipes, $ 1 . 0 0 .

' $ 2 . 0 0 per foot in each city.

419]

SPECIAL

ASSESSMENTS

69

upon street railway companies the cost of paving between their rails. The new Massachusetts statute relating to Boston, prescribes a detailed procedure for ascertaining the proper amount to be assessed upon abutting owners for opening, widening and constructing streets. There the sum is obtained by taking such portion of the expense as fifty feet bears to the width of the entire street, if over fifty feet in width; in widening streets to a greater width than fifty feet, by deducting from the expense such part as the width in excess of fifty feet bears to the total widening. The remainders become a charge upon the whole community. Various combinations of these several restrictions upon the amount assessable are found in different cities. The several items on the assessment roll become final charges when confirmed by the body which ordered the assessment or appointed the commissioners. This is in most instances the common council, but in some a specified court or a designated ministerial board. In general the imposition is by statute made a lien upon the property assessed. The charters of Baltimore, Chicago, Cleveland, Omaha and San Francisco expressly constitute it also a personal liability of the owner. According to the law applicable to Cleveland the lien lapses two years after the assessment is payable, unless within that time proper action has been begun to collect the same. § 10. Collection and Remedies. Greater variations exist in the methods of collecting special assessments than in the provisions already considered. In some municipalities, notably Baltimore, Jersey City and New Orleans, there are no special arrangements for the collection of this revenue other than those provided for covering the general taxes into the treasury. Other cities again have a minute procedure prescribed for this purpose. The charter defines the time when the assessments become delinquent, whether or not they are payable in installments, the rate.of interest they are to bear, the penalties which attach to non-payment, to what funds they are to be accredited,

7°

SPECIAL

ASSESSMENTS

[420

when and in what manner proceedings are to be taken to collect unpaid assessments by sale of the property assessed. A s an examplewe may cite the provisions of the system recently inaugurated in Boston. If the assessment is not paid within a year from the date of the passage of the order therefor by the board of street commissioners with interest, nine per cent, of such sum, including interest, is added to the next and each succeeding annual tax bill issued for the general tax upon that land. For any parcel for which no tax bill would otherwise be issued, the board are to issue a special tax bill. Each such sum is abated, collected and paid into the city treasury in the same manner as city taxes. The owner may at any time «lect to pay the balance still due from him, or any part thereof, whereupon the board of street commissioners, with the approval of the mayor, may relieve his property from a corresponding portion of the lien. The amount collected is applied t o the sinking fund for extinguishing those bonds upon which money has been raised to defray the expenses of the particular improvement. The collection of the assessment charges is not always vested in the city officials. In Philadelphia, San Francisco and St. Louis, the assessment bills are turned over to the contractor in payment for his work, and he is deprived of all recourse upon the city in case of failure to collect. • In such cities, the certified bills or warrants become delinquent at the expiration of a very short period, after which they bear interest at high rates, and become immediately collectible by sale proceedings. In Philadelphia, moreover, the tenant in possession may pay one of these tax bills, and hand the receipt to his landlord as so much money in liquidation of his rent. In all other respects the contractor is given all the remedies of the city, and may institute legal process for collection in its name. It is the usual practice to leave the taxpayer who thinks himself aggrieved by any assessment entirely to his ordinary remedies under the common law or code. His rights in this

SPECIAL

421]

ASSESSMENTS

71

relation are, however, limited in several cities. Thus, in Jersey City a writ of certiorari upon a sewer assessment can not be taken out after the expiration of thirty days from the date of confirmation. In Chicago and Omaha the courts are forbidden to entertain complaints of technical irregularities as grounds for invalidating an assessment or a sale based thereon. A n d in the charter of St. Louis there exists this peculiar provision, that where a contractor begins legal proceedings for the collection of an assessment warrant, proof on the part of the defendant that the work was not performed according to the contract, and that the real proportionable value of the work had been offered the plaintiff, shall entitle the defendant to a judgment against him only for the amount so tendered, with costs imposed upon the contractor. In no large city outside of the commonwealth of New York has any one statutory remedy been made the exclusive remedy of the taxpayer. § 11. The Rebate Nuisance. We have learned from our historical study, that the commissioners originally appointed in New York were " commissioners of estimate and assessment." In other words, it was their duty to estimate not only the benefits resulting from the work in hand, but also the probable expense about to be incurred. The reason for this was that, in order to relieve the municipality of all special liability, the sums assessed upon the property-owners were collected in advance of the improvement, and applied to the expenditure as the work progressed. If the cost exceeded the estimate, the deficiency was supplied by a re-assessment; if it fell short of the assessment proceeds, the surplus was to be returned ratably to the contributors. A s a matter of fact, the system employed departed from the theory long before it was recognized in the law. W e have an instance appearing so early as 1836, where the actual making of the assessment was postponed until after the completion of the work.1 For 1

Doughty vs. Hope, 3 Denio, 249.

72

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[422

many decades now, it has been the invariable practice to make no assessment upon the parties benefited, until the exact expense of the improvement has been officially ascertained. This phase of development, through which New York passed at an early period, has not yet been reached in several other municipalities. In Minneapolis, in Chicago, in Cleveland, and most probably in numerous smaller cities, the assessment list is to-day made and confirmed before even a contract is entered into for the performance of the contemplated work. In the present experiences of these cities upon this point, we undoubtedly have re-appearances of abuses and defects similar to those which occasioned the change in New York. § 12. Rebates in Mintieapolis. The situation in Minneapolis has recently occasioned serious alarm. The levies for local improvements are made in the light of an approximate estimate of the probable cost, and this estimate is always sufficiently liberal to cover all contingencies. The contractor's figures are as a rule considerably lower than those of the city engineer, and the taxpayer is thus compelled to pay a sum in excess of what is legally due. The excess in certain individual cases has been known to reach up into the thousands of dollars. It is said that there have been at various times upwards of $200,000 of such money in the public treasury, in reality belonging to particular property-owners. During the year 1891, $179,440.60 were collected as special assessments only to be subsequently refunded. Much of the money never reaches its owners, inasmuch as the taxpayers are scarcely less negligent in collecting rebates than in paying the original assessments. The remedy suggested by the authorities in charge of the system in Minneapolis is to delay the assessment until after the improvements have been effected.1 § 13. Rebates in Chicago. 1

The state of affairs in Chicago was

T h e recommendations of the assistant city engineer are published in the Minne-

apolis Evening Tribune, January 23d, 1893.

SPECIAL

423]

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71

still worse until within the past few months. Here the socalled " guess-work " plan was in active operation, resulting in constant confusion in assessment administration, and in irreparable loss to the contributors. In no city in the country had the system of special assessment for benefit attained such a magnitude as in Chicago, and the extent to which excess payments were collected was upon a scale commensurate with the entire revenue. For many years the amount of rebates annually returned to their owners constituted over twenty per cent, of the total assessment proceeds. A s indicated by the comptroller's books, the figures for three years were : ASSESSMENT R E B A T E S IN C H I C A G O

1889 1890 1891

Total Assessments.

Abatements.

Assessments Refunded.

Assessments Annulled.

Total Rebates.

»4,220,869.93 6,987.i55-48 8,790,443-a9

#569.569-21 592,350-73 436,918.55

#482,181.77 795.423-07 1,031,919.47

#7,569.84 8,959.50 28,073.37

#1,059,320.8» «.396,733-30 1,496,911-39

These sums are the actual amounts paid back to the property-owners. The sole cause of the rebate system lay in the inaccurate estimates made by the engineering department. The latter, in their anxiety not to be caught in an under-estimation, were very careful to make the margin of excess wide enough to cover any errors which might have been committed. The loss devolving upon the taxpayers was fourfold in its nature. Firstly, the contractors found no difficulty in learning how great an amount was authorized to be assessed upon the district benefited by a particular improvement, before they handed in their bids upon the work. In fixing their prices, they would then be influenced by the greatest possible sum attainable, and would thereby secure a greater remuneration than they would otherwise have been able to obtain.1 Sec1

This was emphatically denied by the contractors.

SPECIAL

74

ASSESSMENTS

[424

ondly, the property-owners were deprived of the use of the money paid in excess of the expenditures. T h e y were required to pay six per cent, interest upon every deferred installment, but received no return from their money while lying idle in the city treasury. Calculated upon the same basis, the loss of interest during the year 1891 would amount to a sum in the neighborhood of $100,000. Thirdly, the annoyance and waste of time necessary in order to secure the rebate justly due, often counterbalanced any money value which might have been obtained. " T o collect a rebate involves so much labor and bother, so much explanation to this clerk and that official, so many journeyings from bureau to bureau and from department to department, that it wearies soul and body. A n d when a man is called on to do all this, and then told that his rebate is but eight cents, as sometimes happens, he loses patience." 1 T h e fourth consequence was, then, that there remained in the city treasury to the credit of the rebate fund several hundred thousand dollars, for the greater portion of which no claimants had presented themselves. In 1890, the city council passed an order transferring $150,000 of this money to the general fund in order that the city might use it. A d d i n g the sum still remaining in the hands of the city treasurer, the total of unclaimed rebates swelled to $385,000. This money belonged to people who failed to get notice of its award, to business men who would not waste their time in collecting it, to speculators whose property had passed through many hands since the assessments were paid.- A d d to all this the increased expenditures needed to perform the clerical work, and we have a picture of the useless costliness of the pernicious rebate nuisance. That the rebate system is no necessary concomitant of the system of special assessment for benefit, is a fact that has already been appreciated at Chicago. A n application of the 1

Chicago Evening Post, July 14th, 1892.

425]

SPECIAL ASSESSMENTS

75

simple remedy waited only upon the proper agitation. The agitation and investigation appeared during the summer of 1892. The reform quickly followed. It was effected in this way. The council passed an ordinance changing the time of making the assessment. Instead of being made as formerly upon guess-work estimates, the commissioner of public works now advertises immediately for proposals upon the contemplated improvement. After such proposals are received and bonds filed, the lowest bid of the responsible contractors is sent to the special assessment department, where the work of completing the assessment lists proceeds with this figure as a basis. Then, when the designated proportion of the assessment is covered into the treasury, the commissioner of public works closes the contract. This method of procedure has enabled the authorities to ascertain almost to a cent just what the proposed improvement will cost. The changes have in the main proved satisfactory while the rebate nuisance is rapidly disappearing. § 14. Extravagance and Corruption. The most frequently met accusation against the whole doctrine of special assessment for benefit is that it fosters extravagance and abets corruption. Whether or not it is true that municipalities are more easily led to make uncalled-for and premature improvements under one system of raising revenue than under another, is a point about which much might be said upon either side. It can not be denied, however, that we have several notable occurrences of such unwise action under the régime of special assessments, which have been followed by most deplorable consequences. Nor would a work upon the subject have a claim to completeness, did it not at least mention the important instances where taxation by special assessment for benefit has proved no bar to lavish expenditure or political corruption. §15. The Neiv Jersey Insolvent Cities. The quasi-insolvent condition of a number of New Jersey cities has long been

76

SPECIAL

ASSESSMENTS

[426-

familiar to students of municipal activity. That their rapid decline under an overwhelming burden of debt was precipitated b y a change in the judicial interpretation of the then existing special assessment laws, is a fact less widely known. 1 T h e method of providing for the expenses of local improvements b y assessing the whole or a designated portion thereof upon the abutting property, had been the regular practice in New Jersey for many years. Under this accepted doctrine many cities, particularly Elizabeth, were induced to undertake extravagant and wholly unnecessary public works at the expense of the parties specially interested. T h e authorities issued assessment bonds in order to secure the funds needed for paying the contractors, and looked to the assessments as they should be collected to liquidate the bonded debt. Elizabeth, for example, had miles upon miles of streets opened and laid with wooden pavemertts, through the supposed suburban districts, which as yet comprised nothing more than unbroken meadows or worthless woodland. For these purposes, millions of dollars were borrowed b y sale of bonds in anticipation of the revenue from the assessments. T h e expectation that these improvements would forthwith transform unoccupied tracts of land into desirable residence property was sadly disappointed. In the meantime the property diminished in value; the interest charges and arrears upon deferred installments, mounting gradually higher and higher, soon frequently exceeded many tim^s the value of the property assessed, and made it to the interest of the proprietors to release all title of ownership rather than to pay the charges due. A l o n g with all this, came the change in the New Jersey legal doctrine as to the relation of the amount of the assessment to the actual possible benefits. This change, when applied in 1876 to the charter of Elizabeth, resulted in a decision rendering void all the assessments which had been levied in that 1 An interesting account is given in the notes to 2 Dillon, Municipal tions, 928 et seq.

Corpora-

427]

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77

city. 1 This left the outstanding assessment bonds a general burden upon the cities which had issued them—a burden which soon reduced several municipalities to practical insolvency. The only path open was to resort to general taxation, in order to defray the charges for interest and the sinking fund. By 1879, it would have required annual taxation at the rate of six per cent, to meet the obligations of the city of Elizabeth. A s a result, a series of relief acts passed the legislature, aiming by means of compromise to effect a settlement between the insolvent cities and their creditors, and incidentally to exert a pressure upon such of the latter as refused to compromise. A n arrangement was perfected whereby a new series of municipal bonds was authorized as indemnification of the assenting creditors, while the dissenting creditors remained without effectual remedy upon their claims. Elizabeth has now satisfactorily adjusted most of the debt in question. Jersey City, in 1891, still counted over $$,000,000 as her liabilities upon assessment bonds issued for work during this period. In Newark the adjustment commissioners have just completed their task. § 16. Assessment Arrearages in Brooklyn. The course of affairs in Brooklyn during the decade just preceding the year 1880, was scarcely more re-assuring. On December 1st, 1879, tax certificates to the amount of 650,000 were outstanding, of which £1,386,992.37 represented arrears of special assessments which should have been paid in yearly installments.' In addition to this sum were £3,164,504.88 of assessments still to be paid but not yet due. The improvement bonds which had been issued to anticipate this revenue were bearing seven per cent, interest; they had never been considered as a city debt proper, the assessments levied upon the property benefited and the prior liens upon such property having been deemed ample 1

Bogert vs. City of Elizabeth, 27 N. J. Eq., 568.

' T h e r e were at the same time arrearages of #6,243,069.32 for general taxes,

78

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ASSESSMENTS

[438

security for the amortization of the bonds. A great portion of the burden of this debt was thus through arrears of payment being shifted over by the delinquents upon the city as a whole. The process by which this result was brought about may be gathered from the following table: ASSESSMENT

A R R E A R A G E S IN

BROOKLYN

C i t y ' s Assets A g a i n s t t h e Bonds. Year.

1871 1872 »«73 1874 .875 1876 1877 1878 1879

Improvement Bonds Issued.

Deficit. Assessmems in P r o c e s s of Collection.

Surplus.

Assessments not yet P a i d .

86,654, ,405.10 $ 2 . 3 6 7 , 9 3 8 20 $ 4 , 1 8 7 , 2 7 0 . 4 3 6.552' 0 5 5 . 1 0 2,502,885.88 3,908,167.83 6,232, ,104.67 2,661,775.61 3,316,707.02 2,514,670.14 3,979,08495 6,463, ,000.00 5,902. 000.00 3 , 9 8 1 , 1 5 9 . 9 5 i.99'.7»5-36 I 6,956, 000.00 3,630,947.39 >447>77°-3 1 6,614, ,000.00 3 , 7 0 1 , 0 2 8 . 8 2 699,196.46 3.113,774-42 6,262, ,000.00 681,757.99 2.95 5. »33-36 6,230,.oco.oo 629,639.08

899,196.47 141,001.39 253,62204

1,877,812.30 2.213,774-7-2 2,466,467.69 2,645,227.56

i3°.755 °9 7 a 1,819,376.32 1,305,800.88 967,694.21 761,195.98 1,676,813.73 1,103.795.04 2,097,479.40 73'.«33-30 525.32270 6«7.5459«

R e c e i p t s from Special Assessments.

$2,541,856.11 6.407,394.19 «.063,331.57 284.216.54 339.00975 38.647-83 142,167.12 ' 1,348,877.00 519,679.17 499.36304 2,451,468.85 »87,803.31 134,064.53 223,826.28 455.086.68 '76,33893 669,168.27 295.694.81 461.794.55 461,504.64 561.887.08 47.743-7» »9'.793-6» 306.777 38 75,225.36

A few words of explanation are required. Inconsistencies necessarily arise from the varying methods of accounting in 1

F r o m the finance reports of the particular cities.

* N i n e months only. ' Census

Bulletin

(or y e a r 1889.

* E i g h t e e n months. » Collection temporarily suspended in 1 8 9 1 ; $ 1 , 0 2 9 , 3 5 1 . 5 0 in 1892.

84

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ASSESSMENTS

[434

different cities. In no two municipalities can the same system of book-keeping be found, and this fact alone is sufficient to preclude strictly scientific comparison in matters of finance. The receipts from all sources have but little significance, inasmuch as they may be abnormally swelled by revenue from extraordinary sources, such as gifts, devises, bond sales. Again, the current taxes are not always itemized in the finance reports; so where the actual receipts under this head have not been shown, the general tax levy is here used to supply the place. Finally, the returns of special assessments are defective in several minor respects. First, whenever the work is performed directly at the abutters' expense, the item does not enter the public revenue at all. This is very common in cases of foot-ways. It is also allowed for other improvements in various cities, notably San Francisco and Chicago, where the property-owners have the option of taking upon themselves the construction of the work in question. Secondly, where the contractor is paid by assessment bills to be collected by him, the amounts assessed are frequently entirely omitted from the treasurer's books. Thirdly, where the city receives by dedication new streets in suburban districts, it may have required, as a condition precedent to acceptance, that the cost of constructing the new roadway be defrayed by the property-owners benefited. If so, the sum expended would not enter the municipal budget. It is interesting to note that the system has brought the largest comparative returns in Chicago and Buffalo, nearly equaling in amount the revenue from current taxes in each of those places. § 19. Classification according to Purposes. The table on the opposite page gives a statistical view of the different purposes to which these assessments have been applied. It will be seen that the sums total in the two tables do not always coincide. This arises from the fact that the amount of assessments collected in one year, is seldom the amount of the assessments levied in that year. Here the latter figure is

435]

SPECIAL

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SPECIAL

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ASSESSMENTS

[436

given whenever possible. Even these numbers present but an inadequate idea of the extent of the work annually performed by special assessment officials. In Giicago, there were over 2000 separate assessments laid during the year 1891. In New York, during the same year, 100 street opening proceedings were considered by the department of law, and 345 assessment lists were received by the board of assessors—a total of 445. Of these, 17 and 239 respectively reached the final stage of confirmation. Special Assessments. § 20. Variations in Receipts from While receipts from special assessments constitute a form of extraordinary revenue, yet their variations are on the whole not so great as might be expected. The truth of this statement may be gathered from the figures below which show the various returns in several cities for a period of eleven years. The omissions are due to lack of data, not to absence of special assessments in those years, and the same reason explains why partial figures for particular classes of improvements only are presented for New York and for Providence. A N N U A L V A R I A T I O N S IN

N e w Y o r k Chicago Total Y e a r . Sinking F u n d Assessments Assessments. Levied.

1881 1882 1883 1884 1885 1886 1887 1888 1889 1890 1891

»651,723.23 994,578.29 993.957-25 i,'5°.55°58 876,119.82 628,336.08 513,238.57 460,726.82 216.760.40 304.387.49 301,226.31

»1,227,169.71 '•395>37 2 9 8 2 2 2 . 3 .757-°4 2 .857.9°5-28 2,889,544.80 3 . 3 ° 7 . 5 6 7 99 3,160,474.67 3,655,956.78 4,220,869.93 6.987.155-48 8.790,443-»9

ASSESSMENTS.

Philadelphia Total Assessments.

Omaha Total Assessments.

Providence Sewer Assessments.

iM70.086.54 892,328.29 , .°32>345-24 461,794-55

»104,811.19 7,5?685 9,468.46 18,344.90 >7. 2 54-43 35.437-73 26.675.75 43.939 9 6 32.0ito.34 27,484.08 28,885.35

. . . . .

$444,500.75 1,076,685.00 1,085,431.16 1,063,331.57

§ 21. Statistics of Assessment Arrearages and Sales. Statistics of arrearages of assessments are not readily obtained.

SPECIAL

437]

ASSESSMENTS

87

T h e general testimony o f assessment officials is, that a l t h o u g h a greater proportionate number of such impositions b e c o m e delinquent than o f general taxes, still the loss entailed upon the city treasury is not so large. W e have seen that in B r o o k lyn there were assessment arrears to the amount of £1,386,992.37 in 1880, while the arrears of general taxes were £6,243,069.32. In N e w Y o r k City, at the same time, the assessment arrears were £8,457,847.79; this sum has since been materially lessened, but at present the uncollected general taxes of the y e a r s 1841 to 1891 are £15,505,526.16. In N e w a r k , the unpaid assessments amounted in 1891 to £555,5 3 4 . 1 8 ; in Jersey City they were £2,187,108.66 as against £3,399,290.41 o f unpaid general taxes. T h e s e unpaid assessments can frequently be collected only b y sale of the property affected. W e m i g h t have expected that New Y o r k C i t y would have taken seriously to heart the costly lesson o f the assessment commission of 1880, but we find that in N o v e m ber, 1891, a public sale w a s held at which 4820 tax titles w e r e disposed of for delinquent assessments, dating some of them from as far back as 1852 and 1854, for sums ranging from t w o cents up to £15,189.63, and adding up over one and a halt millions of dollars.' T h e r e were sold in C h i c a g o in 1891, 9,124 parcels of land to satisfy judgments for arrears o f assessments. In W a s h i n g t o n , on the other hand, assessment sales during the y e a r amounted to only £401.85. 1

See the Notici

of Sale, a huge folio pamphlet of 63 pages.

CHAPTER

IV

T H E LAW O F SPECIAL ASSESSMENTS § I. The Legal Definition. In a series of decisions reaching over the past three-quarters of a century, the courts of this country have evolved a body of law touching the subject of special assessment for benefit tolerably complete and comparatively harmonious. W h i l e this legal interpretation has rested upon the provisions of multitudinous statutes passed by nearly as many different legislative bodies, yet, considered as a whole, the general principles underlying the main questions involved have, notwithstanding a few still unsettled points, been satisfactorily established. In a broad sense, taxes undoubtedly include assessments, and the right to impose assessments has its foundation in the taxing power of the government; and y e t in practice, and as generally understood, the law draws a broad distinction between the two terms. This distinction has been thus defined: "Taxes . . . are public burdens imposed generally upon the inhabitants of the whole state or upon some civil division thereof, for governmental purposes, without reference to peculiar benefits to particular individuals or property. Assessments have reference to impositions for improvements which are especially beneficial to particular individuals or property, and which are imposed in proportion to the particular benefits supposed to be conferred. They are justified only because the improvements confer special benefits, and are just only when they are divided in proportion to such benefits." 1 1

Roosevelt Hospital vs. T h e Mayor of New Y o r k , S4 N. Y . , 108, p. 112.

For

other definitions see Matter of Van Antwerp, 56 N. Y . , 2 6 1 ; Mayor, etc., of Birmingham vs. Klein, 89 A l a . , 4 6 1 ; Taylor vs. Palmer, 31 Cal., 240: City

of

Bridgeport vs. N. Y . & N . H . R. R. C o . , 36 Conn., 255 ; Alexander & Wilson vs. T h e Mayor of Baltimore, 5 Gill, 383. 8«

[438

SPECIAL

439]

ASSESSMENTS

89

A s s e s s m e n t s , t h e n , t h o u g h a s p e c i e s of t a x , a r e u n d e r s t o o d t o m e a n a s p e c i a l i m p o s i t i o n levied in o r d e r t o d e f r a y the e x p e n s e o f a specific i m p r o v e m e n t , u p o n t h o s e

property-owners

t o w h o m p a r t i c u l a r a d v a n t a g e s a c c r u e , and in t h e ratio o f t h o s e advantages. § 2. Legal

Theories.

idea o f e q u i v a l e n t s .

T h e s e impositions are based

on

the

A s J u d g e Miller s a y s :

" T h e principle upon which a corporation tax for the improvement of real estate is founded is quite familiar and well understood. It is based upon the theory that the owner of the property assessed is to receive a benefit corresponding with the amount assessed, and that this is to be paid to meet the cost and expense of the improvement. It is, therefore, of no consequence what the value of the lots may be, provided the enhanced benefit is equal to the assessment."' In t h e e y e o f the law t h e p e r s o n w h o p a y s t h e a s s e s s m e n t h a s r e c e i v e d , o r is a b o u t t o r e c e i v e , a d v a n t a g e s t o h i s p r o p e r t y o v e r and a b o v e t h e a d v a n t a g e s r e c e i v e d b y t h e o t h e r m e m b e r s o f t h e c o m m u n i t y , a n d e q u a l t o o r g r e a t e r than t h e s u m d e manded of him.

In this p a r t i c u l a r lies a m o s t i m p o r t a n t dis-

tinction b e t w e e n a t a x v e r y recent

and

an a s s e s s m e n t .

A s stated in a

decision:

" A tax, it is said, is a contribution to the general f u n d ; the amount is taken from the individual, and nothing which benefits him individually, as distinguished from the mass of citizens, is given in place of it. H e pays, and by the amount he pays is poorer than he was before. Not so with an assessment of the class we are considering. T h e property-owner pays it, but in legal contemplation, he loses nothing. H e receives the value of his money in the betterment o f the property, and in addition to this, he is benefited t o the same extent that all other citizens are, in that a thoroughfare of the city in which his property is situated and in which he probably lives, is improved. T h e authorities almost universally take such an imposition, though confessedly laid under the taxing power, out of the category of taxes and taxation as those terms are employed in 1

Matter of M e a d , 74 N . Y . , 2 1 6 , p. 2 2 1 .

SPECIAL

9°

ASSESSMENTS

[44O

organic limitations on legislative power to levy or authorize the levying of taxes and in general statutes."1

The payment of a special assessment for benefit, then, is nothing more than an exchange. The improvement effects an enhancement in the value of the adjacent real property for which the owner pays its market value. But though ostensibly an exchange, it is a forced exchange. It may be required without the owner's consent, and often in the face of his direct opposition. How can such interference with private property be justified ? By what authority can the government constitutionally compel a class of citizens to pay for an improvement which, though it may confer perceptible benefits, is neither demanded nor desired by them? A review of the judicial decisions which have attempted to solve this problem will show that the legal theories of special assessment have passed through three stages of development—stages separate and distinct in spite of broad over-lapping and frequent confusion. § 3. Under the Police Power. First, we have a number of cases in which the levy of special assessments is supported on the ground of the police power of the state. " Police power " is such an elastic formula that the judges would almost involuntarily turn to it for an explanation of every new burden laid upon the citizen. This was all the more natural in this instance, since the earliest objects for which special assessments were levied were analogous to sanitary regulations. The property-owner was required to grade or drain his lot or to lay a side-walk in front of it, and in case of failure to do so, the municipal authorities undertook the work on their own account, and caused the expense to be assessed upon the party benefited. This came clearly under the police power to abate nuisances, and could easily be regarded as a penalty for neglect to carry out the orders of the public officials. But the application of this theory is necessarily very limited in its scope; it must 1

The Mayor, etc., of Birmingham vs. Klein, 89 Ala., 461, p. 466.

441]

SPECIAL ASSESSMENTS

gi

permit the property-owner the privilege of effecting the improvement for himself, and can allow the state to interfere only when there is a clear case of default. The principle of special assessment for benefit was soon pushed forward into new directions, and a broader basis than the police power became necessary for its support. § 4. Under the Power of Eminent Domain. So the second theoretical stage, like the first, was conditioned by the purposes to which the system was applied. It was developed out of the process of opening new streets in the larger cities. From this operation it was seen that every new thoroughfare greatly enhanced the value of the abutting property. Compensation was to be made for the injury inflicted by the exercise of the right of eminent domain, but in this case the owner was not damaged, to say nothing of being positively benefited. W h y pay damages to a man who has not been injured ? The only way to arrive at a just result, it was said, is to deduct the value of the benefits from that of the property taken and to award the remainder, if any, as compensation. This process was apparently nothing more than the exercise of the power of eminent domain; and by extending its application, that power was invoked to support a compulsory contribution when the benefits conferred exceeded in value the property taken for the new street. This fact must account for and explain the statement frequently met with in the early reports, that a special assessment is not a tax. A tax is a burden imposed by law; here we have no burden, and hence no tax. The eminent domain theory, however, soon encountered insurmountable difficulties. All the ingenuity of the lawyer was needed to make it cover impositions for benefit upon persons from whom no real property was taken, and with the inauguration of special assessments for paving, parking, grading, etc., it broke down entirely. The whole system was on the verge of destruction when the highest appellate court of New York, in the leading case of The People vs. The Mayor, etc., of Brooklyn,

SPECIAL

92

ASSESSMENTS

[442

reversed the decision of an inferior court, which had held that special assessment, being an exercise of the power of eminent domain without adequate compensation for the property taken, was unconstitutional and void, and placed the system clearly and distinctly upon the foundation of the taxing power. 1 § 5. Under the Taxing Power. The third stage of legal theory then vindicates the phrase " taxation by special assessment for benefit." In whatever respects assessments may differ from taxes, they are levied under the taxing power; they are not included in the power of eminent domain. The distinction between these two powers is clearly pointed out by Judge Ruggles in the case just cited, contributions in the form of taxation being demanded of the citizen only as his share of a public burden which is to be borne by him in conjunction with all other taxable citizens, while contributions demanded under the power of eminent domain are special exactions in addition to his share of the public burden. That the imposition does not reach all subjects within the political district, does not in itself brand it as a special exaction within the scope of eminent domain, noi does it make it the less a tax. Judge Ruggles says: " The people have not ordained that taxation shall be general so as to embrace all persons or all taxable persons within the state or within any district or territorial division of the state; nor that it shall or shall not be numerically equal as in the case of a capitation tax ; nor that it must be in the ratio of the value of each man's land, or of his goods, or of both combined; nor that a tax ' must be coextensive with the district or upon all the property in a district which has the character of and is known to the law as a local sovereignty nor have they ordained or forbidden that a tax shall be apportioned according to the benefit which each taxpayer is supposed to receive from the object on which the tax is expended. In all these particulars the power of taxation is unrestrained."2 1

T h e People vs. T h e Mayor of Brooklyn, 4 N. Y . , 419, reversing case of same

title, 6 Barb., 209. '' People vs. T h e Mayor of Brooklyn, 4 N . Y . , p. 427.

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443]

ASSESSMENTS

93

And Chief Justice Ames, of Rhode Island, in an opinion written but a few years later, says with regard to a similar objection: " It is evident that it gains even a fanciful or formal support for its existence only when the law is to be applied to the case of one, part only of whose land is taken for the street, leaving a part benefited, or to one whose land is taken in one place, he having land benefited in another, in which cases the law provides for a set-off of benefits against damages—the balance either way, only, to be reported by the commissioners or a jury. We say formal or fanciful only, because it must be evident that after all the real question is, Can there be in such case a constitutional assessment for benefits upon estates benefited by the improvement ? for if there can be, no reason can be given why a man should be excused from this assessment upon one part of his estate really benefited because another part of it has been taken to make the improvemeut." 1 Many, if not all, of the confused utterances concerning the distinction between the powers of eminent domain and of taxation found running through the whole body of law upon this subject, arise from this, that the two operations of assessing damages and of assessing benefits have been hopelessly confounded. Just because, in many instances, tho same set of persons act as commissioners to estimate the value both of property taken and of benefits conferred, the courts often assume that the two functions derive their authority from the same source. In only a few cases have they been plainly distinguished. In taking a man's land, he is damaged to the full market value of the property, and should be compensated to that extent. Whether he is benefited by the improvement is a separate inquiry, to be ascertained relatively to the entire benefit conferred. § 6. The Essential Limitations. A special assessment then is in one sense a tax. It is a compulsory contribution demanded of the taxpayer by the government as his share of 1

Matter of Dorrance Street, 4 R. I., 230, p. 242.

SPECIAL

94

ASSESSMENTS

[444

a common burden. Yet, although special assessments come under the taxing power, the courts have generally concluded that they are not taxes within the technical meaning of that term as it is employed in commonwealth constitutions restricting the legislature in their exercise of the power of taxation. 1 Constitutional limitations requiring uniformity and equality of taxation and assessment upon a true money valuation, are held, with four or five exceptions, to apply to taxation for general purposes only, and consequently to be inapplicable to special assessments.' A s we have seen, but very few commonwealths have any specific provision whatever upon the subject in their organic laws. A r e there, then, no restrictions upon the legislative power of special assessment, or are there limitations inherent in the very conception of the term—limitations sufficiently determinable for interpretation by the courts ? This question has been answered in the affirmative, and legal authorities have attempted to define the limits beyond which a legislature may not pass. They give as the essential characteristics of taxation, first, that it must be for a public purpose, and secondly, that it must aim at equality and uniformity by some method of apportionment. 3 T o these may be added, as relating exclusively to special assessments, that the imposition must not exceed the benefit. W e shall do well to consider these propositions in some detail. § 7. Public Purpose. First. Special assessments may be authorized for public purposes only. Private benefits may be involved—in fact, must not only be involved but must also be 1 Cooley, Taxation, p. 636 ; also pp. 626 to 636, where provisions and citations of the separate commonwealths are given. 2 Dillon, p. 907 et seq. 2 Mayor of Birmingham vs. Klein, 89 Ala., 461 ; Emery vs. San Francisco Gas Co., 28 Cal., 345 ; Hayden vs. City of Atlanta, 70 Ga., 817; Hines vs. Leavenworth, 3 Kan., 186; Yeatman vs. Crandall, II La. Am., 220; Motz vs. City of Detroit, 18 Mich., 495 ; Daily vs. Swope, 47 Miss., 367; Garrett vs. City of St. Louis, 25 Mo., 505 ; Cain vs. commissioners, 86 N. C., 8; Roundtree vs. City of Galveston, 42 Tex., 6 1 2 ; Gilkeson vs. Frederick Justices, 13 Gratt., 577. 3

Cooley, Constitutional

Limitations,

chap. 14; also 2 Dillon, sec. 737.

445]

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ASSESSMENTS

95

substantial, certain and capable of being realized within a reasonable and convenient time—but their object must be one in which the public is interested. 1 T h e doctrine that the power of taxation can not be exercised for other than public purposes is most authoritatively set forth in the case of the Loan A s s o ciation vs. T o p e k a , in which the opinion was written by Justice Miller. 1 It reads: " T o lay with one hand the power of the government on the property of the citizen and with the other to bestow it upon favored individuals to aid private enterprises and build up private fortunes, is none the less a robbery, because it is done under the forms of law and is called taxation. This is not legislation. It is a decree under legislative forms. Nor is it taxation. . . . There can be no lawful tax which is not laid for a public purpose." * However difficult it may be to apply this limitation to cases of ordinary taxation, no such difficulty is found in its relation to special assessments. N o one can tell which part of the general tax levy is to be expended for any specific object, and the limitation as to purpose belongs scientifically rather to the power to appropriate than to the power to tax.' N o t so with special assessment for benefit. Here appropriation and assessment g o hand in hand, and every taxpayer would be a party aggrieved should the proceeds be laid out for the ends of private gain. But while it may be easy to bring a definite case before the courts, whether or not a particular purpose is public is a question to be decided in the light of all the surrounding circumstances. T h e chief purposes to which the system of special assessment for benefit has been adapted are those connected with the betterment of streets within the bounds of municipal corporations. A s Judge Sawyer contends: 1

Matter of Fourth Avenue, 3 Wend., 452.

* 20 Wallace, 655.

• aid., 4

p. 664.

Burgess, Political Science and Comparative Constitutional Law, ii, p. 152.

SPECIAL

96

ASSESSMENTS

[446

" T h e improvement of a public street in a city, to be thereafter used and controlled by the public, is undoubtedly a public work. But it is equally clear, as a general proposition, that the improvement of a street is more beneficial to the local public, or the immediate district in which it is located, than to the whole city. But this fact renders the work no less one of a public character." 1 Some improvements sustained by the .system do not come strictly under this head, but all have distinct elements both of public and of private benefit. A few examples will demonstrate the limits within which the decided cases have permitted these two elements to vary. How far may the public benefit preponderate over the private ? The repavement of a street b y special assessment, although already paved at the expense of abutting owners, has been repeatedly upheld, even where the pavement replaced has been in fair condition and entirely satisfactory to the parties assessed.' A public square is for public use whether intended to be traveled upon or not.3 A number of commonwealth courts have sanctioned assessments for turnpikes and highways through agricultural lands, on the ground that the property in the vicinity was specifically enhanced in value, but the Pennsylvania tribunals have come to the opposite view that in such cases the private interest is too small to form an adequate basis for special assessment for benefit.' In this connection, the case of Thomas vs. Leland is something of an anomaly. 6 T h e legislature of New Y o r k passed an act in the spring of 1835, authorizing three designated commissioners to assess the sum of $41,000 " upon the owners of all real estate situated in the said city [of Utica] in proportion to the benefits which each shall be deemed to have acquired by 1

Er.iery vs. San Francisco Gas Co., 28 Cal., 345, p. 349.

» City of Lafayette vs. Fowler, 34 Ind., 140. * Owners of Ground vs. The Mayor of Albany, 15 Wend., 374. •Washington Avenue, 69 Pa. St., 352. > 24 Wend., 65.

447]

SPECIAL ASSESSMENTS

97

the location of the northern terminus of the C h e n a n g o canal in the city of Utica, as nearly as can be estimated." The m o n e y , when collected, was to be applied to the relief o f certain private citizens w h o had entered into a bond for that sum as an inducement to procure the terminus of the canal in Utica. W h e n the matter was b r o u g h t before the court, the latter decided that these facts did not detract from the public purpose of the tax, and upheld the proceedings on the ground that individual personal benefit, aside from the benefit received as a member o f the community, was not necessary. T h i s decision carries the doctrine to the extreme. It would scarcely be followed b y the courts of to-day. O n the other hand, there are cases which sustain a minimum of public benefit, and a m a x i m u m of private benefit. T h e various acts for the reclamation of swamp lands, for the draina g e of overflowed fields, for the erection o f levees, have all been held to contain an element of public interest on the side o f improved sanitary conditions. T h e courts, too, have compelled the commissioners to include in their awards, for the payment of which assessments were to be levied, damages to the franchise of a turnpike company claiming to have been injured by the construction of a street which permitted people to avoid the toll-gate.' In another instance, the Hon. Samuel B. R u g g l e s made a report as referee " t h a t if the place of burial be taken for public use, the next of kin may claim to b e indemnified for the expense of removing and suitably reinterring the remains," and the money for this indemnification was forthwith assessed " upon the property owners benefited."* T h e case of Litchfield vs. Vernon goes even one step further than this.' In A p r i l , 1859, an act passed the N e w ' M a t t e r of Flatbush Avenue, I Barb., 2S6; Matter of Hamilton A v e n u e , 14 Barb., 4 0 5 ; T h e Seneca Road Co. vs. T h e Auburn & Rochester R . R. Co., 5 Hill, 170. ' Matter of Beekman Street, 4 Bradford, N. Y . , 503. 5

41 N . V . , 1 2 3 ; People vs. I a w r e n c e , 36 Barb., 177, affirmed 41 N. Y . , 137.

98

SPECIAL

ASSESSMENTS

[448

Y o r k legislature entitled " a n act to provide for the closing of the entrance of the tunnel of the L o n g Island railroad company, in Atlantic street in the city of Brooklyn, and restoring that street to the proper grade, and for the relinquishment by the railroad company of its right to use steam power within said city." In order to defray the expense of this so-called improvement, the statute subjected the owners of premises within a specified district to special assessments for benefit to that amount. In this suit, prosecuted for the payment of an assessment, the whole proceedings were questioned from the stand-point of constitutional law. T h e defendant offered to show that the entire scheme was intended for the benefit of the railroad company and not of the land-owners, that the closing of the tunnel and the removal of steam from the street conferred no benefit, but rather inflicted injury upon the property in question; and although opinion in general was divided on the subject whether or not the existence of the tunnel and the use of steam upon the street were beneficial or injurious, yet the offer was refused and all testimony on that point excluded. Upon appeal by the defendant, the constitutionality of the acts was upheld, although a new trial was granted for technical defects. J u d g e Grover, in his opinion, argued that the assessment was made in the exercise of an unlimited power of taxation by the legislature: " This local assessment . . . was based upon the ground that the territory subjected thereto would be benefited by the work and change in question. Whether so benefited or not, and whether the assessment of the expense should, for this or any other reason, be made upon the district, the legislature was the exclusive judge. The constitution has imposed no restriction upon their power in this respect. The counsel for the appellant concedes that this is true so far as closing the tunnel and grading the street are concerned, but insists that compensating the company for abandoning the use of steam and substituting therefor horse-power, does not come within

449]

SPECIAL

ASSESSMENTS

gg

the like principles. I am unable to see upon what ground the power of the legislature can be limited in this regard."1 § 8. Apportionment. Second. Special assessments must be levied according to a definite rule, and within a fixed district. The assessment upon the owner of a lot is not limited to the expense incurred for the improvement in front of his particular lot.' If it were so limited, it would be possible to make it cover an arbitrary exaction which could not be constitutionally upheld.1 The power to apportion belongs to the legislature. So it is said in one case: " This unlimited power to tax necessarily involves the right to designate the property upon which it is to be levied—in other words, to apportion the tax. And except in cases where the proceeding is merely colorable, and it is really and substantially an exercise of the right of eminent domain, the judicial tribunals can not interfere with the legislative discretion, however erroneous it may be."' The legislature, however, need not exercise the power directly; they may delegate it to the municipal authorities, or they may permit the commissioners who estimate the benefits to fix the district for assessment also. In such cases, the statute indicates the principle on which the limits of the district are to be ascertained, as on all real estate " benefited," on all " in the vicinity," or on " adjoining" or " abutting " property.' But while the property to be assessed must in some manner be determinable, the district need not be fixed in advance." It must necessarily depend more or less upon >41 N- Y . , p . 133. 1

Ex parte T h e Mayor, etc., of Albany, 23 Wend., 277.

3

Woodbridge is. T h e City of Detroit, 8 Mich., 274; State vs. City of Portage,

12 Wis., 562. 4

Scovill vs. City of Cleveland, I Ohio St., 126, p. 138.

5

Burroughs, Taxation,

sec. 146.

•People vs. T h e Mayor, etc., of Brooklyn, 4 N. Y . , 419.

I CO

SPECIAL ASSESSMENTS

[4j

0

the extent of the benefits. 1 W h e r e , however, it is fixed b y the legislative body, a conclusive presumption is raised that n o property outside of that district is benefited; and if the commissioners include such property, the assessment is invalid. 1 W h e n it is left to the commissioners to fix the district upon the principle of benefits, no property benefited can legally b e omitted.' T h e commissioners can not assess for benefit lands l y i n g outside of the designated district;' nor can the municipal authorities prescribe a district, so as to include property situated outside the municipality 4 T h e p o w e r to fix the district, whether resting in the legislature, or delegated to the municipal authorities, is discretionary and judicial in its nature. " T h e l e v y i n g of the assessment," says J u d g e Currier, " was an exercise of the t a x i n g power. T h a t is conceded. T h e legislature, therefore, in the e x e r c i s e of this power, was at liberty in its discretion t o impose the w h o l e burden of the cost of the proposed improvement upon the neighboring proprietors to be benefited t h e r e b y ; and so it might in its discretion limit or extend the district to be taxed, and thus increase or diminish the sum to be paid by any particular proprietor.'" H o w small the district m a y be, is a point undecided. It should probably be determined not a priori, but as each case arises. T h e courts w o u l d certainly not interfere unless the action were shown t o constitute an arbitrary exaction. H o w large the district m a y be made, is also undecided, but this question has been partly answered by our third essential limitation. § 9. Not to Excecd 1

Benefits.

Third.

A special assessment

State vs. District Court of Ramsey County, 33 Minn., 295.

• A l e x a n d e r and Wilson vs. Tlie Mayor, cu., of Baltimore, 5 Gill., 383. * City of Chicago v>. Baer, 41 111., 306. 4

Turpin vs. T h e E a g l e Creek and Little W h i t e Lick Grand Road Co., 46

Ind., 45. 6

Matter of Lands in the T o w n of Flalbush, 6o N . Y . , 39S.

• Uhrig vs. City of St. Louis, 44 Mo., 458.

SPECIAL

45i]

ASSESSMENTS

lOI

must not exceed in amount the estimated value of the advantage accruing from the improvement for which it is levied. A careful writer on constitutional law formulates the principle in these words: "The conclusion to be drawn from the main current of decisions may therefore be said to be that, notwithstanding some apparent exceptions, local assessments are constitutional only when imposed to pay for local improvements, clearly conferring local benefits on the property so assessed, and to the extent of those benefits. They cannot be imposed when the improvement is for the general good, without an excess of local benefit to justify the charge." 1 For the same reason that lands outside of the district and not benefited by the improvement are not to be included in the assessment list, so property to which benefits do accrue ought not to be assessed over and above the value of those benefits. If special assessments are based on equivalents, then nothing more than an equivalent can justly be taken from the taxpayer. Such a sum, it is argued, would, so far as it exceeds actual benefits, be clearly the taking of private property without due compensation; it would be an arbitrary act of confiscation, not taxation. But though this may be said to be the general rule, it can not be termed a universal rule. The courts of New York, in their early decisions, acted on the principle that unless the benefits accruing to neighboring lot-owners equaled the whole cost of the improvement, the special assessment could not be approved. A s far back as 1830, they said that " if the benefit to the owners of property within the range of assessment is less than any contemplated improvement will cost, they can not upon any just construction of the act be made to pay the whole expense."* And again four years later, the same tribunal declared that " when property is not and can not be benefited to the extent 1

Iiare, American Constitutional

3

Matter of Fourth Avenue, 3 Wend., 452, p. 454.

Law, vol. i., p. 310.

I02

SPECIAL

ASSESSMENTS

[452

of the amount assessed upon it, it is the duty of this court to send back the report until property can be found sufficiently benefited to defray the expense, or until the proceedings shall be discontinued." 1 Y e t there was no intimation that this e x cess should be defrayed b y the public at large, inasmuch as the statute contemplated throwing the w h o l e burden upon the adjacent property-owners. T h i s doctrine has, however, been s o m e w h a t modified by the more recent decisions of the N e w Y o r k courts, w h i c h now seem reluctant to fix any limitations upon the legislative power as regards the amount o f the assessment to be levied. S a y s Judge F i n c h (1883): "There is no force in the objection that after fixing the assessment district the total expense can not be assessed upon the property included, but only so much as is found to be the actual benefit. That is but another form of saying that the legislature can not impose the whole cost upon the area which it decides is benefited to that extent. The case of Stuart vs. Palmer expressly holds that the legislature may cause local improvements to be made, and authorize the expense thereof to be assessed upon the land benefited thereby. The resolution of the county board imposes upon each owner his share of the cost in proportion to his benefit accruing."' Similarly an O h i o court has declared that t h o u g h special assessment rests upon the principle of equivalents, yet it must in its very nature be fallible, and so, if the rule of apportionment be equal and uniform, the fact that the property is not benefited will not invalidate the assessment.'" A n d in V e r mont, Judge Redfield g a v e it as his opinion that the benefit need not be actual so l o n g as there is a possibility of the benefit for which the assessment is made. 1 A change has also taken place in the interpretation of the 1

Matter of Albany Street, II W e n d . , 149, p. 153.

See also Owners of Ground

vs. T h e Mayor of Albany, 15 W e n d . , 374. 1

Matter of Church, 92 N. Y . , I, p. 6 ; see also Stuart vs. Palmer, 74 X . Y . , 183.

5

Northern Indiana R. R. Co. vs. Conelly, 10 Ohio St., 159.

* Allen vs. Drew, 44 Vt., 174.

453]

SPECIAL

ASSESSMENTS

IO3

l a w b y t h e N e w J e r s e y c o u r t s , b u t in a direction j u s t o p p o s i t e t o t h e d e v e l o p m e n t in N e w Y o r k .

Judge Elmer expressed the

N e w J e r s e y v i e w in a n e a r l y c a s e t h u s : " T h e expense of opening and improving roads and street is undoubtedly a governmental burden, and may be defrayed, at the discretion of the legislature, by taxes imposed on the state at large, or upon a particular district, or upon a particular class of persons or property, or upon the particular property benefited by the e x p e n d i ture in the ratio of the advantage derived. T h e constitution of this state has imposed no limits on this power, except that it can only be exercised as a legislative power. T a x e s to be such and to c o m e within the legislative power, must perhaps operate upon a community or a class of persons or property by some rule of apportionment ; but they may be universal or limited, discriminating or general, equal or unequal." 1 The

relation b e t w e e n

the extent

of the benefits a n d

the

a m o u n t o f t h e a s s e s s m e n t w a s t a k e n t o b e a q u e s t i o n for t h e l e g i s l a t i v e a n d not for t h e j u d i c i a l b r a n c h o f the g o v e r n m e n t . A series of e x t r a v a g a n t a n d u n n e c e s s a r y l o c a l

improvements

g a v e t h e c o u r t s o c c a s i o n t o m o d i f y their opinions. in

Already

1 8 6 6 in the T i d e w a t e r c a s e , i n v o l v i n g an a s s e s s m e n t f o r

d r a i n i n g a g r i c u l t u r a l l a n d s , C h i e f Justice B e a s l e y h a d s a i d : " T h e consideration for the excess of the cost of the improvement over the enhancement of the property, within the operation of this act is the public benefit; how, then, upon any principle of taxation, can this portion of the expense be thrown exclusively upon certain individuals ? T h e expenditure of this portion of the cost of the work can only be justified on the ground of benefit to the public. I am aware of no principle which will permit the expenses incurred in conferring such benefit upon the public to be laid in the form of a tax upon certain persons who are designated, not indeed by name, but by their description as owners of certain lands."* In o t h e r w o r d s , w h e n e v e r t h e special

benefit a c c r u i n g

State vs. City of N e w a r k , 27 N. J. L., 185, p. 193. ' 18 N. J. Eq., 518, p. 52S.

to

SPECIAL

ASSESSMENTS

[454

private individuals from any local improvement is less than the cost o f such improvement, the excess of cost must be paid from the public treasury. T h i s doctrine gained undeserved notoriety in the celebrated A g e n s case, and has since been generally applied. 1 B u t w h e r e an act can be considered t o permit assessments only t o the extent of the benefits, it will b e so interpreted,' nor is the p o w e r to raise money for street improvements b y general taxation inconsistent with the power t o l e v y special assessments for the same purpose, in so far as the latter d o not e x c e e d the actual benefits.* A s soon as the question arose in Illinois, it was decided in the same w a y . W h i l e the entire cost of an improvement m i g h t l e g a l l y be assessed upon the property-owners there must b e a possibility that, in case the cost should exceed the benefits, s o m e part of the e x p e n s e might be charged upon the municipality. T h e court, therefore, laid down this rule: " In these improvements the whole public are interested, and that public should pay the cost on the principle we have suggested ; that is, assess to each lot the special benefits it will derive from the improvement, charging such benefits upon the lots, the residue of the cost to be paid by equal and uniform taxation."' A n d the reasoning of Justice Breese in this case, which declared that an assessment b y frontage did not secure an apportionment a c c o r d i n g to benefits and was therefore unconstitutional, has been largely followed in other commonwealths, alt h o u g h not a l w a y s leading to the same result. In applying the constitution o f 1870, however, the Illinois courts have made use of a specific provision authorizing special taxes for local im1 Matter of Application for Drainage of Lands, 35 N. J. L., 497 ; State vs. Mayor, etc.. of Hoboken, 36 N. J. L., 291; State, Agens prosecutor, vs. Mayor, etc., of N e w a r k , 37 N . J. L., 415.

* Matter of Application for Drainage of Lands, 35 N. J. L „ 497. * State vs. Township of West Orange, 40 N. J . L., 122. 4

City of Chicago vs. learned, 34 111., 203, p. 282.

455J

SPECIAL

ASSESSMENTS

105

provemcnts, as a pretext for practical 1 over-ruling the Larned case. Justice Sheldon says: " Whether or not the special tax exceeds the actual benefit to the lot is not material. It may be supposed to be based on a presumed equivalent. The city council have determined the frontage to be the proper measure of probable benefits. That is generally considered as a very reasonable measure of benefits in the case of such an improvement, and if it does not in fact, in the present case, represent the actual benefits, it is enough that the city council have deemed it the proper rule to apply." 1 In this manner a distinction is drawn between a special tax and a special assessment; a special tax may exceed the benefit conferred, a special assessment must be commensurate with the benefit. Kentucky, too, has given explicit assent to the doctrine that the assessment necessarily demands an equivalent benefit. " The power to impose this character of taxation, must to some extent depend upon the fact that the persons taxed are correspondingly benefited by the expenditure thereof. The courts would hesitate to interfere in cases in which it may be a question of doubt as to whether the persons taxed receive commensurate benefits; but where the taxation is so excessive as to render it doubtful whether the property to be benefited will suffice to pay the assessment against it, they can no longer be deemed taxation. To enforce their collection would be the exercise of absolute and arbitrary power over the property of the citizen—a power which, under our form of government, does not exist even in the largest majority." * Similar views have been expressed by the courts of California and Mississippi,3 and Pennsylvania has reached the same result in a negative manner.4 In the latter commonwealth it is 1

White vs. the People, 94 111., 604, p. 613.

1

Broadway Baptist Church vs. McAtee, 8 Bush, 508, p. 517.

•Taylor vs. Palmer, 31 Cal., 240; Macon vs. Patty, 57 Miss., 378. 4

Hammett vs. Philadelphia, 65 Pa. St., 146; Washington Avenue, 69 Pa. St..

3S2-

IOÓ

SPECIAL

ASSESSMENTS

[456

held that the expense of improvements conferring general benefits only, can not be defrayed by special assessment. T o use the words of Justice Sharswood : "Local assessments can only be constitutional when imposed for local improvements clearly conferring special benefits on the properties assessed, and to the extent of those benefits. They can not be so imposed when the improvement is either expressed or appears to be for the general public benefit." 1 General benefits—that is, all over and above the special benefits—must be assessed upon the whole community. § IO. Legislative Omnipotence. Aside from these restrictions inherent in the very conception of special assessment, and in the absence of specific constitutional limitations, the legislative power to authorize such impositions is most absolute and farreaching in its scope. Over the municipal corporation the legislature is omnipotent. It may, therefore, confer upon the municipal authorities the power to inaugurate a system of special assessments for particular purposes, which power may bé limited or unlimited, absolute or only to be exercised upon fulfillment of prescribed conditions; 2 and the exercise of legislative discretion is not reviewable by the courts. 3 But no greater power can be granted than the commonwealth itself possesses. 4 T h e legislature, then, may sanction an assessment to pay a private claim which in law has no validity; 5 it may authorize an assessment according to the benefits conferred by a completed improvement for the purpose of giving a contractor an addition to the contract price which the corporation by its charter was forbidden to pay.6 It may compel the municipal 1

65 Pa. St., p. 157.

2

Broadway Baptist Church vs. McAtee, 8 Bush, 50S.

3

King vs. City of Portland, 2 Ore., 146.

2 Dillon, sec. 740, p. 899. Town of Guilford vs. Supervisors of Chenango County, 13 N. Y., 143; Sinton vs. Ashbury, 41 Cal., 525. 4

5

6

Brewster vs. City of Syracuse, 19 N. Y., 116.

457]

SPECIAL

ASSESSMENTS

107

authorities to collect the levy before entering upon the construction of the improvement, or it may allow them to pay for the same out of the general fund, and then collect the sum from the taxpayers.1 If the cost exceed the estimate, the additional amount may be raised by a new assessment.* In the matter of re assessment, the legislature is quite unrestrained.* Where an assessment for a local improvement is irregular, the legislature may itself make, instead of authorize, a re-assessment;' or it may create a quasi-corporation, such as levee commissioners, for that purpose. The power to levy special assessments for benefit comes under the taxing power, and the exclusive power of taxation rests with the legislature. § 11. Extent of Municipal Powers. The question how far the municipal authority extends under the statute does not, with us, offer many difficulties. In the United States the municipality has only those powers granted by its charter expressly or by fair implication. No American municipal corporation can impose special assessments for benefit, unless the authority so to do has been distinctly and clearly conferred ; and when the power is cleas. Drew, 44 Vt., 1 7 4 ; Burroughs, Taxation, sec. 1 5 1 , p. 498. See also an act to enable cities and towns to manufacture and distribute gas and electricity, Laws oj Massachusetts, /